BINGO!!! Yes that curve is one. The joining software creates a barrel distortion.
The curve effect is caused by the rotation.
Just to explain what the curve has to do with the rotation of the camera, imagine standing (or do it) in the centre of a room and look at the centre point of the wall in front of you and have someone measure that distance. Now if you rotate and look at the corner of the room you will find that the distance has increased (think Pythagoras theorem). It's the same thing when you are using the camera...once you rotate off centre of your pan, the distance to the subject will increase. An example (taken with the C-700):

Now this was straightened using Panotools, but notice in straightening the image you lose some vertical information, note that the roof of the house in the corrected image is merging with the frame while it isn't in the original image:
http://panotools.sourceforge.net/
Now that I have an E-330 (from an E-300), I was browsing the thread to see how many use the pano-assist mode on the newer cameras vs. those who do it the manual way with older cameras...with the E-330 I'm going to buy an Oly xD card to see if the pano mode has improved since the days of doing it with the C-700.