What kind of villain is best?
That depends on what kind of story you want. Here's my take on what the three kinds of villains do to stories:
Scum add plot, not character. They are not bad for the story, you can develop your hero without personalizing your villain, but they’re not really even characters. They make no choices. They’re just “the bad guys.” They’re someone, something, for the good guys to fight. This is a villain for a clean cut, old fashioned “fighting bad guys” story. Often they are the villains of action movies or some of the bad guys in fantasy stories. They exist not just to die but to be killed. It is the hero who makes any choices regarding them, easy choices, like, “Which sword do I use to cut off it’s head?”
The fallen can be just something for the good guys to fight, but they have more to offer. The fallen want nothing more than to bring others with them into their fall. And so, as the dragon tempted the knight, they will try to trick and draw the heros into becoming nothing better than the evil they fight. The hero’s response to this gives you a myriad of opportunities. Does he stand firm and remain true to his values? Does he slip and then repent his mistake? Is he drawn into becoming one of the led astray? Or does he weigh the lies in the balance and choose death, becoming, as the villain wished, one of the fallen?
These are the villains of fantasy more than any other genre. They are the Black King and the Dark Lord, they are powerful as well as evil. This is a category that you can make any species fit into, but the most naturally suited to the part are those that are so far gone, they are not only evil themselves but they control all other evil things. They cause fear, they corrupt and destroy, they are dangerous. They force the hero to make the most important choice, one that will decide whether he remains a hero or not.
While the led astray can also develop the character of the hero, they are characters in their own right. They are not just, “the bad guy.” They may not show any inclination towards doing the right thing at first, but they do still have a conscience. They are still struggling, still choosing, still human. Sometimes, like the fallen, they may try to corrupt the hero. Misery loves company: they’ll feel better about themselves if they’re not the only ones on the path to destruction. Often they envy the hero. They see the choices they could have made and weep.
These are my favorite villains. They elicit compassion, and it is that which makes them human, makes them a character. Someone still loves them. Even if they are so wicked that there is only one man or woman in the story who still loves them, it is enough. At least one person, mother, sister, brother or even just the reader, weeps at their death. Because there was a chance for them. Whether they chose life or death, it was theirs to choose. They not only make the hero choose, but they are also choosing for themselves.
And choice is story.