Visually? Easily the 16-bit generation. They really mastered 2D pixel art to the point that they still look good today.
In terns of gameplay, I don't know that we've seen any real advancements from the Wii/PS3/360 generation. I think of Skyrim, Red Dead, Dead Space, Battlefield 3, Modern Warfare, Halo 3, Gears, Banjo Kazooie: Nuts&Bolts, Crackdown, God of War 3, Killzone 2, inFamous, Uncharted, Mario Galaxy, Xenoblade, Wii Sports, Bayonetta, Assassin's Creed, Borderlands, Mass Effect, Arkham Asylum, Crysis, Total War, Left 4 Dead, Minecraft, etc. etc.
I'm just going from memory, so I'm leaving out a bunch, and my personal genre biases from back then are shaping the list (no fighting games, while shooters and open world games are overrepresented). It was also a generation that was heavy on some genres (FPS) and light on others (JRPGs). Even so, just feels like, for every major genre, all gameplay conventions we've come to expect were perfected during this time, and everything that has come since has been refinements.
It doesn't hurt that the GaaS concept was still in its infancy and limited to either meaty expansions or throwaway cosmetic microtransactions. Games had to ship complete and succeed on their merits as a complete package. The potential for nickel-and-diming players that shapes much of game development and direction today was still over the horizon. Game budgets and team sizes had grown but were still small enough for a sub 3-year turnaround time.
In short, for the West, that generation represents most of the best of what we have now minus much of the worst. You can go back and pick any of those games up, and they play very comparably to same-genre entries made today.
Caveat: My argument applies more to Western games. For Japan-led genres, I could see the PS2/Gamecube generation being seen as the best for a lot of the same reasons.