Java development for SAP is in its early stages and an actual developement environment is not currently available until Web Application Server(WAS) version 630. However it is going to be based on a piece of software called eclipse which is an open source project made up of a consortium of many several large companies (including IBM, redhat, fujitsu, sybase etc...). This provides and excellect tool for developing Java applications and it is free to download and use.
SAP NetWeaver development studio