I love G1, because of childhood nostalgia. As a child I never had a genuine My Little Pony but always wanted one and loved the G1 cartoon series. I almost completely missed G2 (I only have McDonald's Princess Silver Swirl), and at the time of G3 I was not really interested in the MLP. G3.5 is the baby generation for me, grew on me a little bit. G4 was strange at first, but I like it.
I think all generations have cute and nice ponies, but what makes G1 my favourite, is the roundy, cute and innocent design. G1 ponies are more pony-like than the later ones. Unlike the G3.5 and above, especially G5, they resemble a horse. And My Little Pony is a line of fantasy toy horses after all.
Favourite ponies, hard to choose. I like ponies in Posey pose and Firefly pose. And the Big Brother ponies.