I would not recommend using an ereader to read PDFs.
I only use my KT (pretty much the same as the KG minus the light) for reading pure novels, just text and for that it does a great job.
If I have a PDF I want to read I would use my tablet, which arguably does a better job of reading PDFs than a PC does really given that I can carry it around switch orientations, pinch and grab the screen etc..
As to annotations I can't speak for that as I don't use them, I just read novels on my my and when I take a break let the auto-bookmark feature sort things out for me.
For me it's perfectly fit for purpose and especially at the price I got it for.
If I want any more functionality I'll use my tablet. (with the disadvantage of much less battery life and more of a strain on my eyes).