Available in iTunes now. A free app that stitches panoramas and guides you through every step of the way. Integrates with Photosynth.net (LiveID required) where you can further edit your creations.
Tap the screen to display the centering frame guide and follow the prompts for each successive shot and tap finish when done.
While the photos appear in your Camera Roll, uploading to photosynth.net provides automated fit and finish since further edit online!
Here is the raw output stored in my iPhone Camera Roll. (a three frame pano)
Photosynth initial view. Note that there is some distortion (just like you’d get with an ultra wide angle lens) but this app has potential.