Shock! Horror! Microsoft’s Photosynth is a neat little free app that captures a panoramic image (up to 360° if required)…
Simply tap the screen to start shooting, sweep the [wikipop]iDevice[/wikipop] camera around the scene and it will automatically take a sequence of shots (or you can tap the screen again to add a shot). Tap the Finish button and it will stitch the images together to create your panoramic picture. I could have cropped the edges of the image to straighten them up but apparently we prefer the organic/ragged look.
So MS can do it when they try. If only they tried harder more often.