This isn't a definite top ten of the best and worst characters. Instead it is a list of characters who have made a game more enjoyable or made it so that stack of work you've been putting of is a preferable alternative to sticking with the game.
Only rule is that I'm only putting one entry per series in for either category.

You asked for a cool update and now you are going to get one... or at least one that is better than no update at all. Booya!

10. Great Character:
Sensei (I-Ninja - Cube, PS2 maybe Xbox)



I-Ninja is one of my favourite 3d platformers. It is basically a cross between Mario, Sonic, Super Monkey Ball and a ninja.
Anyway, in the game you take the role of a homicidal ninja (the best kind of ninja, in fact it is the best kind of anything... except girlfriend) who accidentally kills his sensei in the opening cutscene. The sensei comes back from the dead to haunt/instruct the ninja through the rest of his quest. I forget what the quest was exactly, something ninjary about aliens.
Anyway the sensei is tre cool because A) he is voiced by Billy West and B) he seems to have no idea what is going on and constantly mentions mixed up proverbs like : 'Remember young one, a stitch in time... is worth two in the bush'.
Really, the screwed up proverbs are the only reason he is cool but since they appeared in a game I paid a whole five bucks for I salute him. By the way, I couldn't find a picture of the sensei so deal with it or I'll send some hired goons over to your place.

10. Bad Character:

Oh where to begin!
How about with this guy:
Dignus & his generals (Stella Deus - PS2)



Stella Deus is a semi decent SRPG for the PS2 (as mentioned). It plays pretty well but a retarded cheese monkey(you heard me) could have written a better script. Basically this evil dude named Dignus wants to take over the world and sends his generals to kill the main character... who is emo. I can't remember if that actually is the storyline but it is something shit like that.
Basically the dialogue goes a little something like this:
Dignus: Bahhhhaaa, I've a big red mustache and pubes to match. Generals take over the world.
Crazy General: NNNARRRGGHH I want to taste their flesh!
Chick General: Yes, my lord.
Mysterious General: ...

and it goes on like this.

Also to point out the obvious: Don't give the main villain a name that is practically 'Dingus'.