I second your choosing: Archlinux.
After having installed and used it for a while, you will probably notice you have to reformulate your first post in this thread, and you will probably have more accurate questions that will have a proper answer.
I suggest you to install whatever Desktop you prefer (coming from Ubuntu you are probably familiar with Gnome, but there's also KDE and XFCE). And later look into Window Managers. These are probably your key piece here, since they define the basics about how you will interact with your computer.
Having used Archlinux for a while will also give your doses of command line usage, so you are not that scared about it.
You definitely can't live without X in pure text-mode if your java application has some kind of GUI interface (it probably does, doesn't it?).