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Evernote is a good app is easy and can be free depending on how you use it. I have hundreds of PDFs in my account. They are organized and searchable.
I like the new iBooks idea. But I hate always having to sync my phone.
Considering I quite literly just did it, I can tell you how. If you have the app iBooks, it becomes quite easy. Enable "books" to appear in your dropdown menu on itunes. Now, just click and drag your .pdf's into the folder 'books'.
ta-da. Just like music.
(if it doesn't let you do it, you might have to put something in that folder the long way - i.e. downloading a .pdf from the internet/email - and THEN you can click and drag).
By way of an update. By far the best way is to upload the pdf to dropbox, open it in the dropbox app on your iphone or ipod (you have to restart it to refresh), then click "open in..." and "ibooks".
The pdf is automatically saved in your ibooks shelf, and the quality is maintained.
And, there is always the free Adobe Reader (4 stars), that not only opens a pdf, but the app has a few other features as well. Of course, that is for after you have the document on your iPhone.