I've been using this for the past 4 years. They've got a nice iPad app that includes highlighting, but unfortunately their desktop app can't handle highlighting yet. :(

Their priorities are a bit backward. The desktop app has been surpassed by almost all other competitors mentioned here. Sad. Used to be great.

I use Papers with Dropbox for syncing my library. Works pretty well as long as you don't try to run it from several computers simultaneously.

I'm pretty happy with Papers, too, though I must second the other post about the Mac app being related to second class status. There has been basically no feature improvements (highlighting, for crying out loud) since 2008 when I started using it. Now I use Skim for annotating instead, which is a bit lame since you can't see the annotations within Papers, but the advantages outweigh the disadvantages.

Its download interface is quite nice. You can follow links in IEEE or Web of Science and d/l a lot of related papers + metadata painlessly. This makes it really good for coming up to speed with new subject areas.