I think the beard looked its best around season 3. The producers made him trim it back too much before season 2.
He's actually got a neck beard in ''The Child'' which is missing from the rest of season two (and, I think, the rest of TNG). In that one episode, it's noticably bigger and bushier than in later episodes.
I remember reading a 1988 interview with Frakes where he said the producers had the studio hairstylists take his beard down "11% percent", so I guess that was after they filmed "The Child." They probably got a look at the first dailies and thought it should look neater.