I noticed the thread on Photosynth and thought I would add a little more about that research group. I know Rick Szeliski and Matt Uyttendaele, very smart people.
I've tried pretty much all of the panorama stitchers out there. Adobe's is by far the worst, and Microsoft's is by far the best. Szeliski's algorithms are currently found in Microsoft Image Suite 2006. Unlike most stitchers, it is based on a robust treatment of the general camera projective transformations, so it can handle rotations, panning, zooming and even limited camera-position changes (modulo big visiblity changes of course).
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Here's an example that first impressed me. In a Soviet documentary film I own, they discuss this diagram of the Venera soil-drilling apparatus, but they never show the whole diagram. They pan around and zoom in and out, and I didn't expect to be able to resolve all that into one image. I was quite surprised when Rick's program did it.
An updated version of the stitcher is in a new product, Microsoft Graphic Designer, which will give users more control over a big class of transformations (affine, homography, 3D rotation, etc). It handles lens distortion and a variety of projection surfaces. I haven't tried it myself yet. link
I have Panorama Factory and Autostitcher of course, but I never use them now, they are nowhere near as powerful as DIS2006.
Uyttendaele also recommended a program to me called ptlens for some non-projective transformations like vignetting.