Galuna Island Arc
Phantom Lord Arc
Tower of Heaven Arc
Fighting Festival Arc
Oración Seis Arc
Tenrou Island Arc
Grand Magical Games Arc
The current arc is my favourite, but also the others weren't bad.
Fighting Festival For The Win!
Galuna Island. It had a interesting story and great development for Gray, and it was certainly early enough in the series for me to not feel like FT was winning too often. Phantom Lord was great too, but some of the fights were a little overhyped, just a little. The ending to Gajeel and Natsu's fight was kind of lame too.
I don't have that one favorite arc. Sure Galuna, Phantom Lord, Tower of Paradise, and Daimato Enbu were epic, but the only arc that doesn't really "fit" so far is still the Edolas arc, especially after the time skip, because it was the most chaotic one, and even though Lisanna returned at the end.
I would have voted for 3 arcs but only one is allowed ^_^ I like Phantom Lord arc, Fighting Festival arc, and the Grand Magical Games arc.
I love Loke's arc too, but it's too short to compete =)
I think Fighting Festival, Galuna and Tower of Heaven would be the 3 I'd choose as my favourites. The former is because it provided more depth to my favourite character( Laxus) and in the end revealed his reasoning behind putting the fighting festival together, though misguided it may have been.
Overall though, I'd say I enjoyed a lot the arcs before Edolas more than after it; Oracion Seis being quite a mixed one fore me. Despite the what Lucy gained from it and some really solid fights.