2009: JavaDecompiler can do a good job with a jar: since 0.2.5, All files, in JAR files, are displayed.
See also the question “How do I “decompile” Java class files?”.
The JD-Eclipse doesn’t seem to have changed since late 2009 though (see Changes).
So its integration with latest Eclipse (3.8, 4.2+) might be problematic.
JD-Core is actively maintained.
Both are the result of the fantastic work of (SO user) Emmanuel Dupuy.
2018: A more modern option, mentioned in the comments by David Kennedy Araujo:
JetBrains/intellij-community/plugins/java-decompiler/engine
Fernflower is the first actually working analytical decompiler for Java and probably for a high-level programming language in general.
java -jar fernflower.jar [-<option>=<value>]* [<source>]+ <destination>
java -jar fernflower.jar -hes=0 -hdc=0 c:\Temp\binary\ -e=c:\Java\rt.jar c:\Temp\source\
See also How to decompile to java files intellij idea for a command working with recent IntelliJ IDEA.