If we need to generate PDFs on the fly in a JEE web application , then we have 2 open-source options: using Apache FOP or iText.
The approach used by both the leading projects is different. Apache FOP uses XML/XSL to create a XSL-FO file using XSLT Transformation. This XSL-FO is then rendered into a PDF using the PDF FO processor. This is a pretty neat solution as there is a clear separation of concerns. But the only caveat is that U need to have a pretty good hold over the XSL language, which in my personal opinion is very arcane and difficult to learn. But if you gain mastery over XSL, then there is pretty much nothing U cannot do with FOP :)
iText is a pure Java API that allows developers to create PDFs on the fly. For e.g. the iText API would have methods such as 'addPara','addBlock','addImage' etc. etc. So U end up embedding the presentation logic in Java code...but it may not be a big deal for anyone except design purists. It is also possible to use absolute coordinates while creating your PDF's, but I would advice against if there is a possibility of the look&feel of reports changing often.
iText is hugely popular and has been ported to .NET (C-Sharp port known as iTextSharp and the J-Sharp port known as iText.NET)
The popular JasperReports open-source reporting tool uses iText in the background to make PDF documents. Also iText boasts of superb speed - (Creating a 1000 page PDF takes only a few seconds). Even on the FOP site, they recommend iText as a post-processor tool for merging, encrypting, changing PDF documents.
If someone is looking only for a PDF manipulation tool then they should have a look at pdftk. It is also based on iText.