TNG had the right number of multi-episode arcs and recurring characters (especially Q). Also every season finale was a cliffhanger two-parter with the first episode of the next season. Unlike TOS, it felt like things that happened in the episodic TNG episodes (heh) actually mattered in the larger world, even when it wasn't directly a part of a story arc.

DS9 is my favorite though, partially because of the story arc. It was also done quite brilliantly, with the story arc always being present, but not really solidifying into something substantial right away. This along with Babylon 5 were amazing. Prior to these shows, the only television sci-fi I had ever seen with a story arc was Robotech. Battlestar Galatica (original) had something of an arc, but was more like TNG.

I found out that I personally prefer two types of shows:

- ones with a season-long arc. This gives the authors time and space to develop the characters, and reach a satisfying conclusion. But these often suffer from pacing issues, because mid-season episodes become filler.

- ones with episodic stories and with a season-long arc (a problem or a villain that keeps popping up). This helps with pacing, but still lets authors build up momentum and develop characters and stories. These often suffer from underdeveloped arcs though and unresolved season cliffhangers hinting at "that arc we developed, it's so much bigger than you thought".