My current system is a local directory synced between computers. There are subdirectories for fields of study, and each field has further subdirectories for topics of interest. Right now this is adequate. Problems it has: 1. Difficult to browse through topic directories 2. Need to manually rename papers to a common filename format (e.g. Author Year Title.pdf) 3. Can't annotate papers
I've tried PaperPile, a web-based literature manager, and it generally works pretty well. However I dislike that it requires Google Apps login, and it costs money which feels contrary to the principle that knowledge should be free and open.
Calibre is a software usually used for ebooks that also seems promising for research papers. It's licensed under GPL v3 and supports tags, search and metadata download (via plugin with some configuration). It doesn't seem to have good annotation support.
I'm interested in ways you manage your scientific literature. If you could share them I'd really appreciate it!