For me this generation has been utterly dominated by sequels, a team has had a smallish budget and made a great core game - and then through the power of iteration made a sequel that really stands on its own.
Mass Effect 2 (I think the story was better in the first, but the pacing and gameplay are superior in the sequel)
Uncharted 2 (First game was good fun, it took a big budget to give the set piece action adventure game that really showcases)
Assassins Creed 2/3 (Again, the first one had some interesting ideas and gameplay, the second and third made it not boring)
Super Mario Galaxy 2 (First one was an instant classic, sequel beats it in every way)
Batman: Arkham Asylum (suspect this will be replaced by the sequel - but this was the first superhero game I really loved and it made me feel like the Dark Knight).
Honorable Mention
Mirrors Edge (There was a great, new gameplay mechanism in this and the art direction was superb. They lost their way about halfway through the game and made a bad shooter. EA boss s**tcanned this and put his money into generic tentacle alien sequel Dead Space 2.)
Demon Souls (Probably my favourite game of this generation, but it's extremely inaccessible and poorly balanced)
Valkyria Chronicles (Again, another game I loved but it's heavily marred by the scoring system. You have to beat maps by zerging as fast as possible, and making perfect shots. (reload if you miss) - tactics are sidelined)
Infamous, I loved this - very open world, good art direction and a sympathetic everyman lead. The limited budget shows a lot in the game, and it came out at the same time as Prototype (which I couldn't get into at all because I couldn't relate to Alex Mercer in anyway).
Mass Effect 2 (I think the story was better in the first, but the pacing and gameplay are superior in the sequel)
Uncharted 2 (First game was good fun, it took a big budget to give the set piece action adventure game that really showcases)
Assassins Creed 2/3 (Again, the first one had some interesting ideas and gameplay, the second and third made it not boring)
Super Mario Galaxy 2 (First one was an instant classic, sequel beats it in every way)
Batman: Arkham Asylum (suspect this will be replaced by the sequel - but this was the first superhero game I really loved and it made me feel like the Dark Knight).
Honorable Mention
Mirrors Edge (There was a great, new gameplay mechanism in this and the art direction was superb. They lost their way about halfway through the game and made a bad shooter. EA boss s**tcanned this and put his money into generic tentacle alien sequel Dead Space 2.)
Demon Souls (Probably my favourite game of this generation, but it's extremely inaccessible and poorly balanced)
Valkyria Chronicles (Again, another game I loved but it's heavily marred by the scoring system. You have to beat maps by zerging as fast as possible, and making perfect shots. (reload if you miss) - tactics are sidelined)
Infamous, I loved this - very open world, good art direction and a sympathetic everyman lead. The limited budget shows a lot in the game, and it came out at the same time as Prototype (which I couldn't get into at all because I couldn't relate to Alex Mercer in anyway).