In his latest Alertbox Announcement, Jacob Nielsen continues a recent theme about the horrors of using PDF files on the web.
In the last one, PDF: Unfit for Human Consumption he talked about how PDF files are great for printing, but are terrible for presenting documents on the web.
In the most recent issue: Gateway Pages Prevent PDF Shock he talks about ways to make the user experience better if you do use PDF files on the web by warning the user and giving them the context to decide whether or not they want to open the PDF or not.
Here's how I would summarize these two issues:
Don't use PDF files as a replacement for a web page- it makes users mad to have to open a separate application that doesn't work like a browser.
If you do provide PDF files, make sure the user knows they are PDFs and give them information to make a choice. For example, if you make a link to a PDF file, at least make sure the link says that it is a PDF so people aren't suprised.