A panoramic photo is a wide photo, wider than the camera lens can handle in one go. Instead, you sweep the phone across the scene in one motion and the camera captures multiple images, then stitches those pictures together into one widescreen image.
To snap a wide picture, it seems you'll choose the panorama option from the camera menu, then simply tap the camera button and move your phone left to right, as directed by onscreen guidelines.
The movement and multiple images also mean a camera can create a 3D panorama. Many cameras and phones let you do just that, even if the camera isn't a 3D model and doesn't have a 3D screen. Apple hasn't shown any interest in 3D up to this point, unlike Sony, Panasonic and others, so it's unlikely the iPhone will do 3D panoramic shots. 3D is just the sort of gimmick Apple likes to stay away from.
If you have a jailbroken iPhone, you can use the panorama mode by downloading Firebreak from outlaw app store Cydia.
If you're of a more law-abiding bent, you can take panoramic shots using an app like AutoStitch Panorama. For more camera apps check out our favourite photography apps for the iPhone, and let us know what you think in the comments, over on our Facebook page, or even on our shiny new Google+ page.