This week's giveaway is in the EJB and other Java EE Technologies forum. We're giving away four copies of EJB 3 in Action and have Debu Panda, Reza Rahman, Ryan Cuprak, and Michael Remijan 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.