First of all, Java runs very well on any Raspberry Pi, even the older and smaller ones. Even for JSP web applications with a tomcat or similiar, the Pis are usable. I recommend using the suitable OpenJDK from Azul on it, because Oracle tends to look at these small computers as "embedded systems", which - in case you want to go commercial - need an Oracle license.
I never did any development on a Pi, though. Regarding limited CPU power and RAM space, and remembering development on equally small computers some years ago, I would recommend NetBeans as IDE for Java development, if you are going to serious development with more than a handful of of classes. Compared with "simple" text editors (well, vi, and especially emacs, are not that simple, but nevertheless not Java-specialized), it makes things like importing classes or debugging much easier, and it runs good even with smaller memory sizes. Also, it supports maven, which is a necessary thing in today's Java development, and several version control systems, like git, out of the box, as well as deployment mechanisms.