Nice to see some discussion of this type of music (which I love). This whole genre was an integral part of my high school musical experience and will thus always be memorable to me. However, I don't really separate "grunge" out from the larger "alternative" umbrella of the 90's, where you had other popular bands like Live, Offspring, Oasis, Better Than Ezra, Collective Soul, etc.
Of the five you listed, it's really a tough call -- my answer might vary upon the day you asked me. The best overall album, I think, is Soundgarden's Superunknown, though that gets some competition probably from the first three Pearl Jam albums. AIC, as much as I love them, never put out an album I found to be consistently stellar throughout. I feel much the same way about STP and Nirvana; both did a lot of great songs, but none of their albums completely hooked me as albums.
All this lolnirvana stuff I really don't get. You don't like his music, fine, but I think he at least had a recognizable artistic respectability. I liked a lot of his music, as well as his word-play with lyrics -- but to each his own, I guess.
Getting back to the larger alternative scene, my favorite album would probably be either Oasis' (What's The Story) Morning Glory? or Weezer's debut album. Unless you'd like to get really obscure, and then Sunny Day Real Estate's Diary probably trumps them all.
My favorite band in the alternative genre? I'll have to give that some more thought; it's a very difficult question.