What a fabulous topic. (For what it's worth, I referenced BrickWars Sets year index lists
to show me what came out when.)
I choose 2002 as the best year because of the "happiness density" of the products released that year. 2002 was Episode 2's release. It's notable because there aren't too many big sets, but the amount and quality of the smaller or medium sets was awesome. And when they did go big, they went great.
The two big, minifig-based sets were Jango's Slave 1 and the first Republic Gunship. Jango's had some structural problems, but they were easily resolved with a few extra parts, but that first RGS was just a great build. Fun and it looked great. You also got these little sets that were packed with playability and cool minifigs: Jedi Duel (Dooku/Yoda), Tusken Encounter (Anakin/Tuskens), and those fantastic minifig packs (Final Duel I/II, Jedi Defense I/II). The medium sets were a mix of classic re-releases (X-Wing, Y-Wing/Vader TIE) and new stuff (Jedi Starfighter). And the set which, I think, offers the best playability/fun per dollar to this day: Bounty Hunter Persuit with Anakin, Obi-Wan, and Zam. If you like Technic, they did the five Technic character sets. And, last but not least, UCS saw the release of Yoda and the ISD.
We're getting some fabulous sets, for sure, but there were some really fun, smaller sets back then.