In my opinion, the v1 was nice because it was very basic and the era of infrared connection with tamagotchis. A classic tamagotchi.
The v2 was a step up, with more characters, shell designs, games, and the added bonus of Gotchi Points, which led to the shop and items and presents. Codes could also be used for bonus items. The infrared connection improved greatly.
The v3 is just...awesome. Even more characters and shell designs, more games, passwords you get from tamatown.com and Tamagotchi Connection: Corner Shop to enter on your tama, a king, a way to keep track of generations, even BETTER connecting, more items, more codes, and the concept of traveling that came about on v2 was widely thought out and used on the v3, to have traveling with plane tickets!
As you can see, I love them all, but the v3 has to be my favorite.