comment I made regarding this on the Kobo forums here, for reference sake I add it here verbatim:
PDF's were designed for publishing/printing purposes, and as such uses absolute positioning based on the page size... which makes in inherently unfriendly to 'reflow' concepts like font resizing. Essentially, PDF's are made to be 1:1 digital copies of print material.
So taking PDF's that are created with a standard page size, and viewing them on a smaller screen like the Kobo's is probably not ever going to be elegant. You're probably always going to be limited to simple zooming and panning.
The only way around this is creating the PDF's so the page size is as small as the Kobo screen. In my case, since most of my master copies of my books are HTML (epub is just HTML/XML wrapped in a zip container), cooking a PDF with an appropriate page size is easy, and reading on the Kobo doesn't require panning around.
Of course, if your master copies are already PDF's, this won't be very helpful to you. Which is exactly the reason I try very hard to avoid PDF's as master copies for ebooks.
Basically what Randal said is true, with PDF you're effectively stuck with what you've got. Converting anything but very simple PDFs, and keeping formatting intact almost always requires lots of manual correcting of the things you mentioned (paragraph splits, etc).