Caveat: neither of the following apps work with DRMed books. If you need to read library books or textbooks with hardened DRM, you should check the vender or library for a list of possible apps.
For deDRMed books,
I find that I, personally, quite like Moonreader+ for reading epubs (it has all the functions I personally want and it shows notes as a popup) although I vastly prefer EBookDroid for reading PDF's (it has some very handy splitting, cropping and viewing options).
However both Moonreader and EbookDroid have a less then ideal learning curve due to the sheer number of menus and options for customization. EbookDroid does not have reflow options, Moonreader occasionally duplicates chapters. I also can't say much about the notetaking options for either app.
As always YMMV.
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