Metal Gear has produced some amzing villians. The Boss and Ocelot stick out in my head; I found Liquid to be rather drab (Not to mention that I think Ocelot did a better job as him).
But, for my favourite villian, there is only one choice:
Sephiroth is a pansy who has a boner for his mom. Kefka is just batshit crazy, plus he succeeds where most villians fail; he actually manages to destroy the world! By the time you fight him, he has literally become a god. Of course, he also has the greatest song from a video game ever as his music.