First spot definitely goes to Vaegirs. Although they don't have any best troops (I still consider Veteran archers better due to their armor) they are very versatile and cheap compared to other factions. When you leave your castle you usually don't know what to expect and single troop army has it's limitations (e.g. archer army can be steamrolled by cavalry, cavalry is poor at sieges and footmen are extremely slow and somewhat weak alone), so it's best to be equipped for all occasions.
Second spot goes to Rhodoks for their sergeant+sharpshooter combo. Mid-low tier troops might be weak, but both sharpies and sergeants are extremely good in their respective roles (plus, sharpies can defend themselves well in melee!).
Khergits are third because of the unique gameplay they offer, and the fact that they perform pretty well on the field and still cost relatively small amounts of money.
Fourth are the Swadians, for their fearsome capabilities on the field and good performance in the sieges. Their knights and sharpies are definitely great, while sergeants perform really well in sieges.
Fifth are the Sarranids. Well, nothing good about them, simply Swadian copycats with bad ranged troops.
And the last place goes to the Nords.I absolutely HATE them because I often play as Vaegirs and I'm constantly at war with those snail-eating, salt-breathing, mud-beards! Taking cities from them is very difficult, and them having both best meele troops and archers makes me think that it's somewhat unbalanced. I never play them, as my pride as a gamer don't allow me to to take such an overpowered faction.