Wow, the new photomerge feature in Photoshop CS3 is a huge improvement compared to previous versions of photomerge. The idea of photomerge is to stitch together a series of photos into a panorama similar to the panorama above. I made this panorama from six overlapping shots that cover about 180 degrees of horizontal view. The six shots were taken without a tripod and in aperture priority mode. Normally you would use a tripod to make sure the shots line up nicely for stitching and use manual exposure mode so all parts of the panorama had the same exposure. But I wanted to test the stitching, alignment and blending algorithms in photomerge.
This second panorama is made from the very same six photos with the older photomerge that is in Photoshop Elements 5.0. I think the same photomerge is in Photoshop CS2 and earlier versions.
Notice the nice blending job that the new photomerge (top most example) did when the shutter speed was increased towards the right side of the panorama that was towards the sun. You have to look closely to in the top example to that there is a change in exposure on the right-hand side. The old photomerge makes kind of a mess and doesn't even try to blend the different images.
A panoramic shot can be nice on a property brochure or flyer or a web site. Many do-it-yourself virtual tour sites allow you to use this kind of panorama shot. In the past I've always used specialized stitching software like PhotoVista or PTgui to make panoramas because Photoshop did such a bad job. Photoshop CS3 has changed that, photomerge finally stitches and blends panoramas as good or better than specialized software.
BTW, if you want to get some more in depth how-to on using Photomerge in CS3 there is a multi-part Video podcast on this subject currently at lynda.com. All you need is a free download of Apple iTunes. After installing iTunes, use iTunes to subscribe to the lynda.com podcast. You can then watch the video on either your PC/MAC or iPod. The Photomerge podcast is #59 for April 20.