Try PDF Reader Pro. Its just $1 and i find it amazing.. You can zoom, annotate(although not so sophisticated), make bookmarks in the pdf file, choose between vertical and horizobral scrolling of pages, there is a 'lock horizontal' option if you want to use only smooth vertical scrolling with a set zoom level. Id suggest you to try it. Yea, the files are stored on the iPad.. It has some good cloud storage upload/download features too!