To take a really high quality panorama photo, you need a tripod, a DSLR and some high quality photo stitching software. But if you want an incredibly easy and fast - albeit ugly - option, it's hard to go past Video Panorama.
Rather than taking a series of individual photos and then having the software stitch them together, Video Panorama works more like the sweep panorama mode in Sony cameras, shooting a short video and then using frames from the video to create your panorama. As a result, the final image can vary vastly in quality, depending on how quickly (or slowly) and how steady you hold your iPhone while taking the shot.
On the upside, the app works both when shooting in landscape or portrait - shooting in portrait mode does give you a bit of a resolution boost though as you sweep from left to right though.
Once you've shot your panorama shot, you're given the option of saving, sending or deleting the image. And that's pretty much the entire app, which is why we like it, despite the UI being as ugly as sin. For $2.49, it's an entirely affordable and incredibly simple way of taking panorama shots with the iPhone.