Lyrically I would go with Ether. Nas destroyed Jay and I don't think he went off topic. The chorus was amazing

" I Fuck With Your Soul Like Ether

   Will Teach You The King I Know

   Not God's Son Across The Belly

   Lose I Prove You Lost Already "

And in the third verse, Jay was ripped to shreads.

" Put it together, I rock hoe's, you rock fella's "

" How much more Biggie's rhymes gonna come out your fat lips ? "

One of the best diss records ever. Notable mentions go out to Real Muthaphuckin G's, The Sauce, No Vaseline, and Hit Em Up ( Even though it wasn't lyrically good, it had a massive effect on rap.

I liked "Second Round Knockout" by Canibus, too. And Dre, EZ, and Luke (can't rap) Cambell used to go back and forth pretty hard, back in the 90's. Now my head is filling with classic fueds!

Kool Moe Dee vs. LL Cool J
Ja Rule vs. 50 Cent
Eminem vs. Cannibus
Roxxanne vs. Roxxane
Nelly vs. Chingy
Krs. One vs. Everybody
B.I.G. vs. Tupac (the mother of all fueds)

But yeah. Ether was the best.

"Whack Rappers" by Afroman. While the lyrics are kind of poor and the delivery kind of flaccid (I mean it is Afroman), he disses like EVERY rapper in it. Kind of ridiculous.