CS3 has a better photomerge utility than CS2. It just makes life easier. I believe Photoshop Elements 6 has the same utility. I'd wait for an elements 6 demo (might already be out) before making any decisions.
I use Realviz Stitcher Express 2 which is a programme dedicated to digital stitching and has massively greater capability than the Photoshop family. It gives options to remove items which may be duplicated in an overlap with its stencil function, employs perspective warping which has to be seen in action to be believed and the stitched files can be exported temporarily into imaging software for adjustment of photographic content. If you want to invest in pano heads etcetera this would be invaluable to you