MUSWELL HILLBILLIES is my favorite. It just feels to me like the Kinks' most successful marriage of concept and songs. VILLAGE GREEN and ARTHUR are always fighting it out for second place.
VILLAGE GREEN, though it has some of the best pop songs ever written, kinda falls apart near the end for me. Replace "Monica" and "People Take Pictures Of Each Other" with "Lavender Hill" and "Days," and you'd have a perfect album, IMO.
ARTHUR, though it rocks and I love the suite-like quality of its best songs ("Shangri-La" is THE Kinks song), suffers from being the first of the Kinks' "theatrical" albums. Ray's singing in wacky "character" voices, the music hall influence really starts to shine through, etc. All this is counterbalanced with some pretty fierce rockin' ("Brainwashed," "Mr. Churchill Says"), but this album is essentially the Kinks planting the seeds of their own destruction.
But yeah, best band ever.