Papers

Papers is a science research library. You add PDF documents to it either through wifi sync with a Mac running the OS X version of Papers, or you can use the built-in search engines to download documents from the Internet. You can also exchange documents via wifi with other users who are running Papers on their iPhones or just read them from the Internet.

Papers lets you flag and categorize documents, it has a built-in PDF viewer, and has a built-in help center as well as a wealth of options. Since it's focused solely on scientific research, it doesn't really lend itself well to other uses. For example, although it lets you search Google Scholar, you can't do general Google searches with it or easily add documents from other sources.

I'm not a scientist or medical professional so I can't attest to all of Papers' merits, but I can tell you that it appears to be a robust app that comes with a fine pedigree: The OS X version of Papers won a 2007 Apple Design Award for best scientific application for the Mac. The price at this writing is low for such an app, and the developer says this is introductory pricing, which means if you need it then it's definitely worth considering.