I would have to say Sakura impressed me the most. She went from being able to do absolutely nothing, do being the first one to defeat an Akatsuki member. Now that is improvement.
My favorite character would possibly be Pain. Hes actually not a bad guy. Sure, he almost destroyed the hidden leaf village, but he is a complex and twisted individual. he had a bad past because his best friend was killed, wouldn't anyone get revenge on the people that did it?