This is purely wishful thinking. I don't expect anyone is actually working on or intending to market the camera I'll describe here, but it's something that seems technically possible and it's something I'd like to see.
It's based on the fact that normal 35mm lenses have a 43mm image circle, which covers way more area than that of an APS-C sensor. The relationships between the image circle, a full frame image and an APS-C image are shown in the figure below:
As you can see, to cover a 35mm frame a lens needs an image circle of at least 43mm. The APS-C sensor covers only the center of the circle. My proposal for a panoramic sensor would extend the APS-C sensor out to 40mm width, while keeping the vertical dimension at 15mm.
Keeping the height at 15mm enables a number of useful features:
Here are two shots which show what a panormaic APS height sensor could do when used with a regular EF series lens:
Obviously you can get the same thing by shooting with a wider lens and then cropping the image from an existing APS-C sensor. The difference would be that a cropped 10MP APS-C image would end up with 5.6MP, while the panoramic sensor image would be 17.8MP if it had the same pixel density. That's a very significant difference!
As an additional benefit, when used in portrait mode the panoramic vertical image could be cropped to yield exactly the same effect as using a shift lens (e.g. minimizing the convertging of verticals for tall buildings).
While you can make panoramics by stitching together multiple images, those who have done it will realize that it's a lot of work (needs a tripod at least, and maybe a panoramic head to do things right, plus good stitching software) and it's only usable with static subjects. A one shot handholdable panoramic camera has lots of practical advantages. It would be something like a digital version of the X-pan film camera.
There are a few downsides of course:
I'm not very hopeful that we will see such a camera soon, if ever, and I'm not very hopeful that the price would be low enough for me to afford, but it's fun to think about and there's certainly no technical problem in making such a camera. It should be cheaper than an EOS 5D based on sensor area, though limited sales might make push up the price a bit.
Of course there's no need to make the sensor 40mm wide, that's just the maximum sise that 35mm full format lenses would support. The APS-H format has a 16:9 ratio and would result from a 15mm x 26.7mm sensor and you could get a 2:1 aspect ratio with a 15mm x 30mm sensor. In each case, EF-S lenses would be usable in APS-C format, but full frame EF lenses would support APS-H and a 2:1 format, perhaps at a lower cost than a full 15mm x 40mm sensor.
I suspect for quite a while we'll pretty much be stuck with 3:2 ratio sensors on DSLRs, though Panasonic have shown they are capable of "thinking outside the box" with the Lumix DMC-LX1 digicam which does have a 16:9 ratio sensor (albeit a pretty small one).
So Canon - how about it? I volunteer to do the beta testing if you make one!