I use Microsoft ICE regularly to stitch site photos from my 5MP cell phone camera. All shots are handheld with 10-30% overlap. I have done 3 shot to 5x5 shot panoramas. The results are excellent.
Keep in mind that any extra regions can be trimmed but regions missed can never be there, hence I take at least 15% extra all round.
As cell phones camera shots are Auto every thing, there is a wide variation in exposure shot to shot, but ICE takes care of every thing.
Another software I use is "Hugin". This is much slower than ICE but I can use HDR to merge widely exposed shots. For example I take a shot of interior of building during construction. The corners are dark and the window opening very bright. In Hugin the HDR option merges all the frames and balances the exposure.