My own choice for best of 2004: Mazbool and Ab Tak Chhappan. Best of 2003: Bhoot, Waisa Bhi Hota Hai Part II. Bhoot is a ghost story, the others are gritty cop/mafia dramas.
All-time favorites: Sholay, Bombay, Lagaan, Don, The Great Gambler, Mard, Suhaag, Amar Akbar Anthony, Satya, Company, Ganga ki Saugand, Kasam Suhag ki, Nagin, Umrao Jaan, Mera Gaon Mera Desh. I admit soft spots for gangsters, Amitabh Bachchan, dacoit movies, Rekha, and camp.