I think all photo software does stiching... I've used Picture Publisher, Adobe
Elements...

I've had good results with AutoStitch, better than CS2 anyway, but my
requirements are modest.

Try free: <http://hugin.sourceforge.net/>

[snip]

I use The Panorama Factory (<http://www.panoramafactory.com/>, $70).
It's not the easiest software to use, but it works very well for
hand-held panoramas and has no trouble when the source images are
tilted at different angles. It's not cheap, but it has a thirty day
trial period.

Advantages:

* Automatically stitches tripod panoramas.
* Allows fine-tuning of overlaps to remove ghosting. (This works well
 even on ridiculously badly matched pictures.)
* "Improve Quality" action: after warping and twisting the pictures to
 merge them, it can go back and redo the warps as a single transform
 so quality isn't lost in multiple operations.
* Manual stitching mode for merging hand-held images. (You specify
 points that should correspond; it analyses the area round each point
 to fine-tune the point placement and then bases the warp on those
 points.)

Disadvantages:

* For hand-held multi-row panoramas only two rows can be handled.
* All source images must be the same size: can be a problem with scans
 from film, requiring an initial trimming-to-size step.
* Although it has exposure matching and exposure correction features
 they sometimes make pictures worse. I don't use them, preferring to
 get it right in the camera.
* Costs $70.

I've used the CS3 "Photomerge" for (test) panos with excellent results
for both JPG and RAW.  For mosaics it worked perfectly on JPG and had to
have a few cracks at RAW to get it right.  I shot a few panos on a
recent road/vacation trip ... have yet to stitch them up.

CS3 is of course more than your budget but a much better photo editor
than bloatware like Elements.

From there you can also buy plugins that do panos/mosaics ... I haven't
done this to date...

Cheers,
Alan