PDF markup: GoodReader
Although GoodReader didn't start life as a PDF annotation tool, it's evolved into a damned good one. You get all the markup tools you expect from Acrobat Professional -- even the advanced editing tools -- so no one will know you marked up the PDFs on an iPad. The app does a good job of using touch gestures for highlighting portions of your PDF for markup. My only quibble is you can't rotate individual pages, so sometimes you're marking up a page rotated 90 degrees from the orientation of the sticky notes' text you're adding.