Looking at the generations I have enough knowledge to comment on, my thoughts go as such:
Gen 3 - NES dominated. Badly. I knew 3 people who owned a Master System. The first I met actually played it, the second I met used one of the controlers on my Genesis for a multiplayer game, the thrid kept it in a shed. The SMS was destroyed by Ninty's liscencing program, and the other competitor was a decisively scatter-brained Atari the had already squandered their presence in the market.
Gen 4 - A rather close battle between 2 major competitors not far off from one another with the presence of some minor competitors. There was a lot of in-fighting between Sega and Nintendo (mosstly on Sega's part), but there were a lot of missteps by Sega and ALL of the minor competitors. Hell, Ninty had some missteps too. It wasn't a dominated generation, per say, but in the end the Genesis only looked good against the SNES because it had a significantly earlier launch.
Gen 5 - There's a clear winner here, as well as a clear scond and third. But what's not so obvious is the game libraries. This is the generation where you really did have to own all of the systems to get all the great experiences. Sega was at an all-time high, and they had some really great partners. Even as the weakest entrant in the gen, if you didn't have a Saturn you weren't getting the full gaming expreience. The N64 was much the same, but also produced a few of the greatest video games in history (Mario 64, GoldenEye 007, and Zelda: OoT come to mind immeadiately). Meanwhile, the leader of the pack had so many great exclusives it's often unbelievable.
Gen 6 - PS2 domination. That's about it. The GC survived on Ninty exclusives and a few others, but even then they weren't single-handedly delivering enough home-runs to gain the respect they once had. The Xbox has a few exclusives, but beyond Halo few are notable (I can only think of NG, DoA, and Steel Batllion off the top of my head), and its biggest stregnth was slightly improved multiplats.
Gen 7 - Nintendo succedes at doing something different, while the other two try to bash eachother as much as possible, and then later spend as much effort bashing Nintendo. The Big N had has a few missteps, but they've still managed to out do the PS2 while their competitors have proven they can easily out-do the previous best 2nd place result with ease. In fact, they are perhaps changing the way console generations play out, and indeed might even put themselves over most generation winners of the past while they're at it. But this gen feature more mud-sliging than 4 and less diversity in gaming experiences than five despite the the advent of motion controls.
I still have to see how this gen plays out, but up to this point my answer is definitely gen 5. It was a time when the companies didn't answer eachother with so many insults (though there were plenty, esp. the Crash Banidoot ads that picked up where Sonic ads left off), but instead with great, exclusive content that showed the system was worth buying in addition to whatever other system you had, instead o opposed to that system.
tl;dr
Gen 5. Yeah.
You do not have the right to never be offended.
