I think my favorite is the episode where Squidward quits the Krusty Krab and goes to live with SpongeBob. It's so funny because Squidward becomes absolutely unbearable and forces SpongeBob to wear a French maid outfit. And then there's SpongeBob's little puppet show. God, that episode was hilarious!
I also like the one where Squidward is desperate to win a toy from the crane machine. SpongeBob keeps winning and Squidward keeps losing. My favorite part is when Squidward goes home and cannot pick up anything because his hand starts working like the crane (complete with evil laughter).
Another funny one was where Mrs. Puff goes to jail and she realizes how great it is to be without SpongeBob. And she meets this woman who calls her Puff Mama. Not to mention SpongeBob and Patrick trying to annoy her.
Actually, a lot of the ones I like are ones with Squidward as a major character.