[kezza]

Annotation on the device is pretty good. It's easy to highlight and make notes, though I don't like that there are two ways to close the note entry pop-up without saving the note (and only one way to close & save). I always seem to hit the wrong button and lose my note. It's also easy enough to scroll through your highlights and notes for each book, a feature that never worked right on the original nook. (To find and review your notes: from inside the book tap the middle of the screen, choose "contents," then choose the notes & highlights tab.)
Ryvyan is right, thought, the notes don't sync anywhere. Perhaps that feature will be added later, but right now the notes are on the device only.