Steps to a good panorama are:
1. Good sturdy tripod, camera level and in portrait orientation
2. Wide angle lens
3. Set aperture to f/13 to f/16 for good depth of field, ISO 100
4. Focus 1/3 of the way into the scene and lock the focus, do this by setting to manual focus, otherwise you will get variation throughout the final scene
5. Lock exposure, otherwise your images when stitched may have distinct bands (light/dark banding)
tip: lock correct exposure by setting camera to aperture priority, set to f/13 to f/16 and note the shutter speed, switch to manual and enter these values
6. Ready… go….
7. Overlap your shots by 20% to ensure the images will stitch together optimally
8. I use Photoshop Elements 9 to create panoramas.