I use the RadEditor to do this type of functionality...

http://demos.telerik.com/aspnet-ajax/editor/examples/pdfexport/defaultcs.aspx

There are several other WYSIWYG editors out there like Cute Editor, CKEditor, etc.  I am not sure which ones are free.

Also, you might look into iTextSharp...

http://sourceforge.net/projects/itextsharp/

Matt