Best for SP or MP? In SP (I don't play MP) Niefelheim is probably the strongest, but I avoid them because I hate water magic. Marverni is strong too (although the mages are ruinously expensive). Helheim is quite strong with very thuggable commanders. Atlantis is also strong.
-Max
P.S. Edratman has a point. Some nations are very strong if you micromanage them properly. I guess what I meant is that Niefelheim is the most straightforwardly-strong. Just take a good bless, build a few Jarls, and go kill your closest neighbor. Marverni has excellent (gemless) battlemagic--again, that's about hassle-free magic at least as much as powerful magic. Blood magic is potentially great on the battlefield, I just hate carrying around blood slaves. And I'm uncomfortable with sacrificing virgins--I usually take growth over death because I want to feel benevolent towards my subjects.
Anyway, Lanka has great troops and strong blood magic.