Insomniac Games are not owned by Sony? o_O

Gah! Then I'll go with the obvious choice, which is Team I... Naughty Dog!

Team Ico because they made the best games ever made.

you people are all so misinformed. Naughty dog is NOT a first party studio, they are second party just like Insomniac.

Both are not owned by sony but might as well be.And sony still owns the rights to all their games

they are first party since 2001

Guerilla Games has my best game of all time, Kill Zone 2. So, I vote for Guerilla Games.

Last time I checked was a couple months ago when I saw a map of sony teams on the PS magazine.It has insomniac and naughty dog as second party studios

guess they were wrong

Incognito is now defunct. There were just a handful of guys left as of a year ago, working on Warhawk updates, and now their website URL leads to the website for the new second party studio Lightbox Entertainment, formed by ex-Incognito guys:

www.incognitostudio.com

Under the name Lightbox, they're working on Starhawk. I'm not really sure why they left Sony and formed their own studio just to do that, though.

Also, to those saying SCE Japan should be mentioned, including SCE Japan is entering muddy waters. They're actually a pretty wide umbrella that encompasses Team ICO, Team Siren, and others, with all but Team ICO sharing developers, ala Nintendo's various EAD groups. The only three specific studios SCEI has are SCE Japan, Polyphony Digital, and Clap Hanz (though Team ICO is pretty much considered its own entity these days, given the amount of freedom and control given to Fumito Ueda).

This somewhat showcases the difference in culture between Western and Eastern game development. Western developers are often split up into specific teams, like Naughty Dog, Insomniac, Bioware, Bungie, Infinity Ward, etc. etc., while Japanese development studios often just a mass of people, moving around from game to game, like SCE Japan, Nintendo's EAD groups, the way guys like Mikami and others moved from franchise to franchise under Capcom, etc. You have some specific teams like Kojima Productions and Team Ninja, but they're rather few compared to similar teams in the West, and it's usually a few key designers that gain notoriety (Shinji Mikami, Hironobu Sakaguchi, Tomonobu Itigaki, Kazunori Yamauchi, Hideo Kojima, Shigeru Miyamoto, Fumito Ueda), rather than the team as a whole (Naughty Dog, Retro Studios, Infinity Ward, Guerrilla Games, Rare).

Respect for them ALL, especially Naughty Dog and Guerrilla Games. But Polyphony Digital is the BEST for me. Voted. =)

Woah!  I just found this really cool site:

http://www.worldwidestudios.net/homepage

Apparently Sony now have an official page dedicated to their worldwide studios iniative.  It has quite a few interesting insights, like that fact they apparently don't own Clap Hanz (Hot Shots Gold guys), while I have assumed the opposite for quite some time now (thanks to Wikipedia!  =/).

Go here to find a list of every studio they own, and details about each.  As you can see, Team ICO isn't on the list, as they're included under SCE Japan.  Surprisingly, Bigbig Studios is on the list despite technically being a subsidiary of Evolution Studios.  Also, Bigbig and Evolution are still listed separately from Studio Liverpool, which means that the "merger" between the two entities was merely a physical move.  They still work on their own separate projects.

Here is the total breakdown of internal development:

Studios: Europe

Bigbig Studios
Cambridge Studio
Evolution Studios
Guerrilla Games
London Studio
Studio Liverpool

Studios: Japan

Japan Studio
Polyphony Digital Inc.

Studios: USA

Bend Studio
Foster City Studio
Naughty Dog
San Diego Studio
Santa Monica Studio
Zipper Interactive

It includes every studio I recall except Clap Hanz, which apparently is merely a second party affiliate.  Notice that Incognito is now no longer on the list.  It also seems the reason we never hear anything from Sony Foster City is because they primarily assist other studios in development, and have helped out on Ratchet, Resistance, Uncharted, Socom, and others in the past.

...

To answer the actual topic at hand, my favorite Sony studio is easily Team ICO, and I do consider them their own studio, as they are generally given free reign to do what they want.  It's basicall Ueda and 40 or so of his hand picked guys doing their best to turn his brilliant ideas into fully realized video games, and I love them for it.

Naughty Dog is my second favorite studio, and the only two that come close to Naughty Dog are Sony Santa Monica and Guerilla Games.  If Killzone 3 is even better than Killzone 2, Guerilla will probably firmly plant themselves as my third favorite Sony developer. 

When it comes to second parties, Media Molecule are on top, and that won't change if they keep pumping out games as loveable and fun as LittleBigPlanet.  Insomniac com in second for Ratchet & Clank.