How to make a cyclorama
Solution 1:
I've tried various different programs to assemble panoramas and I'm extremely impressed by the results from the "Photomerge" tool in Adobe Photoshop Elements 6.
It only outputs flat images, so if you want "VR" style Quicktime you'll need something else, but it's very simple to use, and requires very little (or no) tweaking to produce excellent seamless results.
I think the same functionality is in CS3 and later, but note that the tool in CS2 and Photoshop Elements 5 is definitely inferior.
And here's a sample of the results, as a shameless plug of my panoramas on Flickr:
Solution 2:
As mentioned before, Hugin is a great free tool for photo stitching. You line the photos up as best you can and Hugin will automatically adjust the photo (pinching or expanding) in order to make seamless transitions.
I used it for this combination of about 8 shots taken left to right covering about a 315° FOV. Actual image is 14959 x 1306.
Solution 3:
Autopano Pro gives great results, from what i tried.
It's great for this use, to create panorama from a set of pictures. It finds itself the common points, and adjusts photos to make one big picture (or eventually even a 360).