iPad PDF Reader with annotation support?
GoodReader $4.99

I can't compare it to any other PDF reader for the iPad, but I've been very happy with GoodReader.  From the marketing spiel on iTunes:


  Annotation is a feature long sought after by users who want to add their own mark-ups to PDFs, especially those collaborating as a team on shared documents. The types of annotations that can be created and edited in GoodReader include typewriter text boxes, popup comments ("sticky notes"), text highlights, freehand drawings, lines, arrows, rectangles, ovals, cloudy shapes, text underlines, strikeouts, text insertion marks.