I would like to second the accolades for the Goodreader app on the ipad. Like several other posters, I've used his app to grade papers to great success. The ability to both write on the paper using the free-write tool as well as type comments has been both efficient to me and beneficial to my students since I've been able to provide substantial feedback throughout their papers. I also like the idea of being able to keep electronic copies of stellar papers. Hard copies always get lost in the file cabinet and I'm hopeful that it will be easier for me to access electronic versions. Finally, I also think that my students appreciated getting their papers back slightly quicker since I can simply email them back a my convenience when I'm ready instead of waiting for class.
I also have been using Goodreader as the primary way that I prepare for class. I have been doing almost all my readings on Goodreader instead of by hard-copy. I am hopeful that this will save me time in the future because I will be easily able to save and access my "marked up" versions of the readings. I also appreciate the feature in Goodreader that allows you to email yourself a "summary" of your markings. This is done simply by clicking the "export" button on the bottom right hand corner of the screen and choosing "email summary". What this will do is export all the text that you've highlighted as well as any notes you've made throughout the text. I frequently print out the summary and bring it to class for easy reference.
There are two improvements I can envision:
1) The summary automatically assigns page numbers that correspond to the number of pages in the document. I wish I could assign my own page numbers so that they would correspond to whatever book/article I've taken the reading from. This would make it easier to reference passages on the go using only the summary document.
2) For scanned files, i still need to use my desktop computer to convert the file using Acrobat Pro's OCR technology. Goodreader is only helpful if the pdf recognizes that it contains text (which is what OCR does). It would be nice if there was an app on the Ipad that could do this so I didn't have to prepare the document on my desktop first.