I don't really know if I could pick a favorite, but the one I seem to go back to the most (although infrequently) is "Kid A", and that's for the music more than the songs. Overall, I think "Ok Computer" will always be known as their pinnacle.
I haven't heard "In Rainbows" yet because I don't usually download music or have an Ipod. I would like to get the box set they're releasing for it with the vinyl's and cd's.
I think how they've released it is amazing. I've always considered Radiohead to be a small indie rock band with a large following, and this really shows a trust and commitment to their fanbase. It's the kind of thing only a band in their position (globally) can do and have it work in their favor. I like how they've taken a different route than similar sized bands before them such as U2 or REM who had that "let's take over the world" mentality. Refreshing.