If sampling rate is high does that increase the error or decrease the error?
Well, i don't see how is that related to DSP or DIP, except of course the issue of sampling, but here is what is going on:

If you are tracking the mouse by latching on an OS' provided "onMouseMove" signal then you are already enjoying (almost) the maximum sampling resolution offered by the combination of your (hardware + OS). That would be the absolute max in Fs accessible by other programs running on the system. 

Is that enough? It is, if you are free drawing with small movements trying to get the contour of an object in some photo editing software (for example). But if you click on the mouse and go crazy with it you might start to notice the trick behind the "smooth lines" which is to compose them of linear segments. Therefore, because of the large actual movement compared to the Fs you will start noticing some long lines appearing as the linear segments connect points that are far appart.

Can this Fs be changed? (Increased / Decreased) Yes, it probably can but that would depend on your hardware + software combination. For example, here are a few pieces of information regarding the PS2 mice where you can see a specific command that can be sent to it to change the sampling resolution (search for "set mouse sample rate"). How you actually get to send this command to the mouse so that the sample rate is changed across the system, depends on your OS). 

Will higher Fs lead to improved tracking of the actual mouse movement (smaller error)? Yes, that is the point of increasing the Fs, you can track the continuous physical phenomenon much better.

Why don't we crank the Fs up all the way then? Because depending on your Hardware + OS there will be a limit that you can increase the Fs before it starts becoming "noticable" by your system. What you want to avoid is having the OS triggering the "onMouseMove" signal / message so fast that it floods the message queue and at the extremes the system ends up absorbed to serving just this kind of requests.

Similarly, if you are tracking the mouse position with any other means (a camera looking at the screen for "an arrow that points up left" for example, or the same thing by screen grabbing) and possibly with another $Fs_{Track} &lt; Fs_{Sys}$ then the same thing applies. However, in this case, MAYBE you can somehow increase $Fs_{Track}$ by improving the scanning process...but the best case scenario is that you will be approaching $Fs_{Sys}$ not exceeding it.

I hope this helps.

P.S. Regarding "every flicker", modern mice will report a resolution in DPI (Older mice had mechanical rotary encoders and just good enough resolution). Therefore, you can consider your mouse reporting its position over a very fine canvas. In general, mice are good in discriminating movement and will report robust positions over this fine canvas. There are exceptions however where an optical mouse, at rest, will report changes in the position depending on the surface it rests on. In this case, the mouse gets "tricked" and you can avoid this flicker by changing the mat it rests on. For any other means of tracking, the "flicker" will depend on the tracker and Signal to Noise Ratio (SNR).