The smaller the space, the harder it is to do cheaply and get acceptable results. Also takes a lot more practice.
If you can wing it, buying a fisheye or full 360deg lens would probably be your best bet. Otherwise, you'll have to adjust your shooting practices with a good digital camera.
Instead of taking normal (landscape) pictures, rotate the camera 90deg to take vertical shots (portrait). It'll require a few more pictures, but you'll get more of the area. One downside is you'll also get more barrel distortion in the photo (like curved lines at ceiling/wall, etc.).
Make sure you keep the camera steady and that your overlaps are consistent and the right amount (usually around 20% on the right edge when shooting clockwise). Using a tripod isn't necessary, but it could help out a lot.
Here's a
VirtualTour (if you have pop-ups blocked, the link won't work in Safari) that I did a while ago which was done with the vertical shots (interior) and horizontal shots (exterior) on a Nikon 3200. The stitching was done with ARCsoft's PanoMaker. You can see the distortion pretty clearly in the interior shots. I'm not real happy with the way this one turned out, but it was the best I could do given the circumstances. Never did finish it, as we dropped the listing...LONG STORY.
A nice solution are some of the 360deg lenses you'll find. One I strongly caution you against is the
EGG model. I've heard nothing but complaints from REALTORS® about that particular model...very cheap construction, horrible optics (resulting in grainy, blurry photos), no customer satisfaction guarantee, etc..
I'll be moving our office over to a
Nikon 8400 with a 360 lens (
360 1-VR,
Remote Reality, or
0-360) soon, then use
PhotoWarp to extract usable images from the shots. PhotoWarp is available for MAC (10.2+) & WIN (98+).