The best quality freeware panorama stitching program is Helmut Dersch's Panorama Tools. Unfortunately, it is command line driven and quite difficult and labour intensive to use. There is no automatic setting. You have to define the control points manually. It can output to multi layered PSD format which means you can do additional blending in Photoshop for a seamless stich. However, the quality of the panorama is unequaled by any commercial software. I don't know of any other program that can correct for pitch and roll. I've created multiple beautiful panoramas with handheld shots while on holiday. Each time I'm able to have a perfectly flat horizon with perfectly straight buildings which is a major problem with other stitching software unless you have a perfectly leveled tripod with the camera exactly centered on the horizon. It can also do multi-row panoramas, spherical panoramas as well as rectilinear panoramas.
The are two shareware graphical interfaces for Panorama Tools around, PTGUI and PTAssembler. Both versions gives you a 30 day trial before you need to register. PTGUI costs EUR 49 and PTAssembler US$29 to register. Do check out the stitched images at Max Lyons Digital Image Gallery. He is the author of PTAssembler.
You can also check out PanoGuide for reviews of other stitching softwares. The site needs some updating though.