This week's book giveaway is in the OO, Patterns, UML and Refactoring forum. We're giving away four copies of Refactoring for Software Design Smells: Managing Technical Debt and have Girish Suryanarayana, Ganesh Samarthyam & Tushar Sharma on-line! See this thread for details.
Largely personal choice really. Annotations are good because your configuration is all in one place and they follow the JPA standard. XML is good because your simple Java objects are not cluttered with ORM specific annotations. Both support he same functionality.