Other: Medusa. I like the scaly-skin look; it actually makes sense. Actually, the medusa is just about the ONLY "new look" that I like in the 3E MM. I feel most of the others were a massive step down in quality, from the minotaur that looks nothing like a bull, to the homunculus that looks like it was carved out of moldy mashed potatoes, to the "feathered mane" pegasus and the "look at my stupid-looking beak on a horse's head" hippogriff, to the worst offender of them all, the carrion crawler. Aaagh! And they had finally done the carrion crawler right in the 2E Monstrous Manual! Why, why, why?
Actually, I really like the nightmare, skeleton, and mind flayer in the 3E MM as well, but these are just particularly well-done illustrations, not major overhauls to their looks.
I know what you mean. I think the pencil sketch of the ghoul in the back of the PHB (1st printing) looks better than that purple monstrosity in the MM.
But speaking of purple, my vote for most improved art design would have to go to the purple worm. Before, it looked like a vacuum cleaner hose with teeth.