stitchpanorama is a plugin for the gimp that allows you to merge two photographs together into a partial rectilinear Projection panorama.
You can add control points which are automatically fine-tuned (much like the various GUI front-ends for Panorama Tools). The photos can then be merged into a final output, one image remains unaltered, the other is rotated, blended and distorted to fit (similar to xmerge).
You can download the plugin from the stitchpanorama sourceforge page.
It's simple to use, though it doesn't do correction of barrel distortion - You could use the gimp wideangle plugin or the Panorama Gimp plug-in to correct this first.
Since the output is limited to rectilinear Projection stitchpanorama isn't suitable for creating immersive images such as equirectangular Projection images.