The iPad is a pretty good platform for reading Linguistics papers, not just novels. I actually did all of my grading on the iPad, using a program called iAnnotate, which I would recommend. It lets you add highlights, text notes, drawings to PDFs. It’s a more sophisticated version of Aji Annotate for the iPhone. Getting PDFs in and out requires running a server on your computer to sync a folder over WiFi, and the annotations are all saved not into the original file, but into a copy marked as annotated. But it works pretty well, and it has so far been a nice way to grade and to read journal articles and so forth.
If you’re not trying to annotate, but just to read, I think I like GoodReader best of the PDF readers (universal for iPad and iPhone). Reading with iAnnotate is not bad, but it’s a bit better with GoodReader, and GoodReader has lots of ways of getting documents onto the device (including direct access to your Dropbox folder). It will also read Office and iWork documents, and even works as a video player.