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Pretty much all the journals in my field are electronic even back to the early 20th century. Quality isn't great as those are just image scans of the journals, but very readable.
And yep, the markup options on the iPad seem a bit limited--though my girlfriend hasn't bought iAnnotate so I've not tried it first hand. And the screen is a tad small, another 1" or 1.5" would make a big difference for larger PDFs.
That and the lack of a file management system are the main things that have me waiting to see what the 2nd gen iPad adds, what Android tablets come out and how they compare etc.
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