I've also greatly enhanced the section discussing annotation capabilities – see the newly introduced „Annotation” group. Now that several apps, most importantly the, currently, most recommended GoodReader, have excellent annotation (and passive showing) capabilities, I found it necessary to elaborate on what these apps really are capable of.
As you can see, the (still) cheap GoodReader has the broadest support for annotations except for predefined, built-in stamps (in which iAnnotate is the best) and setting the size / color of the freehand drawing.