Initializing performance appraisal

 Be careful.
We just went through a hiring process that followed most of the guidelines laid out by Manager Tools. It was wonderful. In the process of five interviews, we eliminated half the pool of candidates because they were too honest. The job they wanted is a professor position which is the  primary job description for most our hires. The position we filled was different from professor. Those who defined their goals as professor were quickly eliminated. They are now being tracked back to professor positions but they did not fit our needs. 
Do not lie but do not be completely honest. You can define job skills and responsibilities akin to where you want to end up but I don't think stating that you want to move to a bigger/younger/richer company is ever a smart move. Take care of your family first. Then take care of your career. 

I'm not sure I was clear in the question.  I have no intention of moving up outside my current organization because it's a huge multinational with alot of different opportunities. 
To be more clear:  My boss would be a section manager (underneath a department/division manager) and let's say my long-term goal would be to become a plant manager or a VP of operations, should this be specified on my appraisal?

What about if I am thinking of going back and getting my MBA and making a change into finance or HR within the same organization?  (Hypothetically speaking)
I hope I made sense.  The question I guess should be:  How careful should one be with regards to declaring their ambitions for their own organization within their organization?  

I obviously don't know your company culture, but most companies won't punish someone who wants career development.  Some bosses might, I suppose, deny opportunities to directs in a misguided attempt to protect themselves from losing good performers.  Or if their career has stalled, might not be motivated to help you to progress while they languish.  But even if this happened, I don't see the benefit of keeping your ambitions to yourself.  You have to take responsibility for your career development, and if you say you never want to leave your current role you probably won't be given too many other opportunities.
That being said, there are a few of things to keep in mind, and most of them are common sense.

• Clearly the performance evaluation itself is going to get all of the attention at the end of the day.  Whatever you put in the ambition box will have very little weight when it comes time for promotions.  Focus on setting objectives that help get you there.
• Your goal needs to be within the company.  Any ambitions to leave your current company (even if true) clearly can't be stated here.
• Your ambitions probably should be something your boss already knows about.  Keep in mind your boss may be asked about how they are helping you to achieve your ambitions.  If they've never heard a peep from you then you could be setting them up to look negligent.
• You also might be careful about ambitions to leave your current function (i.e. move to finance, HR, etc.).  I've had employees who stated this desire before, and I subconsciously stopped considering them for increased responsibilities within my team.  If your ambitions are within your current function, then you might find more work thrown your way.  If you want to leave your function, then your opportunities could dry up.  This may not be right, or even intentional, but if you want to move to another function you really need to emphasize your desire for growth in your current role and deemphasize the move.

My recommendation: be sufficiently vague -- talk about wanting to continue to develop within your current role and then eventually to obtain a leadership position, etc.  Perhaps state your desire to be a people manager if you aren't one already (again, hopefully your boss already knows this from you so he can be prepared to answer to his bosses how he's helping you to develop into a manager).  Otherwise I'd leave the details to your discussions with your manager and mentors.

How well do you know your boss? I do tailor my delegations and work assignments to support my direct's future desires. Is your boss going to do something similar or they going to be threatened to hear that you hope to be a few levels above them in the distant future? I agree with Buhlerar that stating goals inside the company is good. If you are looking cross departmental that is where a bit of vagueness may be good. "I am intrigued with marketing and what they do there." 

I think it will pay to be honest about your desires. And, while specificity is good, don't paint yourself into a corner.  For example, say you're a programmer and you might have a long term goal of being a VP.  Great.  Your goals might state something about learning management techniques and growth to a management position.  There's nothing that says you must put down a specific goal of being VP of Operations, even if that's your idea of an ideal position.  Who knows, you might get an opportunity that is great but it's a track to VP of IT.  You put down VP of Operations and maybe you don't get on the VP of IT track.
Also, I don't think long-term goals being set here are necessarily that important.  Focus on your internal long-term goal and figure out a plan on how to get there... then put down what you need to do _this_year_.  Then do it. IIRC, Mark mentioned in some cast that you should focus on a step or two ahead, not the place you want to be 20 years from now.  Two reasons: too big of a step makes it daunting to even start and also that your long-term goals might evolve over that time as you learn more.