If you are dead serious about using a device as paper-replacement for pdfs in the $150 price range, you will want to buy a used tablet PC. The new 7" devices might be okayish, but I think you'll find 7" is even pushing it for good pdf reproduction. I'm also not sure how those devices save annotations; I suspect they use a proprietary system, but I'm not certain about that.
A used tablet PC, on the other hand, will give you the following features: a very readable 10" (or 12") screen, accurate inking which can be written directly on the PDF file itself, a full OS in which you can manage folders however you like, wireless Internet access with instant backup of your files via Dropbox, and the option to have another application running at the same time (for writing down fuller notes, for example). I speak from experience here since I did quite a bit of research this summer to find a PDF reading solution for all the 18th-century Google PDFs I had to blast through for generals this fall. I currently read using PDF Annotator by Grahl Software ($30 academic license), and take more expansive notes at the same time on Windows Journal (free) or OneNote.
It will take a little patience to find a TC1100 or similar tablet for less than $200 on Ebay, but I think $150 is possible. Also, these computers are aging and they are not flawless solutions. They are heavier than current ereaders, which bothers some people. Battery life is shorter, and of course they use LCD screens instead of eInk. At the least, however, you will have a PDF reader that should last through grad school, and when you're then ready and able to upgrade to iPad 4 or whatever tech solution is hot then, all your data will be saved on good-old standard PDFs and Windows notetaking formats.
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