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).
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.