Paradoxically, H3 gets something of a "bad" (using the term very loosely) rap because it's so bloody popular. But I absolutely *adored* H3 and still do. I've never found it "overrated", as some claim, because I think it actually does live up to the hype that preceded it. It's by far my favorite game on the 360, even (slightly) besting CoD4 and GTA4.
H3 is an absolutely gorgeous game to look at, for one, and I never get tired of seeing the balls droppingly beautiful bloom effects - by far the best use of HDR and bloom in a game that I've yet seen. I've always been convinced that you can have something totally shitty looking, but if you light it correctly it can be gorgeous.
And gameplay wise, Halo 3 bests all, IMO.
Story wise my favorite game is Halo, but overall I'd rank my preference of the games as:
1. Halo 3, my third favorite game ever, after Half Life 2 (and its episodes) and Homeworld
2. Halo
3. Halo 2 (which I still totally adore)
I even confess that I've read the Halo novels. Yes, they're a bit of a trash read, but they're fun and I really like the story (even if it is a mash up of Niven's ring world combined with Aliens + other cliches - the halo universe is still really rich and fun, IMO. )
I think the best gaming experience you can possibly get on the 360 is to play the Orange Box, so that you can experience HL2 and E1 and E2. But second to that are the Halo properties.
I look forward to any future projects using the Halo IP. I just really dig the universe.