360Panorama appof Occipital is the answer. All you need to do is slowly spin in a circle while capturing the world around you. They’ve even added a feature that uses the phone’s built-in gyroscope to navigate the image by spinning around, just as if you were still at the scene of the shoot.
This app is available for the iPhone 3G and 3Gs with iOS 4.2+, for the iPhone 4 and iPod touch 4th gen. Watch the demo video below:
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