For those of you that jailbreak your phones there is [a hidden feature in iOS 5 that allows Camera.app to create panoramic images](http://www.idownloadblog.com/2011/11/07/hidden-panorama-mode-uncovered-in-the-ios-camera-app/).
This isn’t worth jailbreaking for. There are plenty of affordable and good panoramic applications in the App Store and obviously Apple wasn’t happy enough with this feature to include it. So it probably isn’t nearly as good as the apps you can get for just a few bucks.