In reply to crustypunkuk:
The Last Action Hero. MASSIVELY misunderstood.
In terms of Arnie actually trying to act in a halfway-intelligent film (as these things go), I would agree with Total Recall but also throw a late entry into the mix - The Sixth Day, very underrated.
Interestingly neither Total Recall nor The Sixth Day particularly needed a musclebound action hero in the lead role, but they somehow worked as Arnie vehicles.
Those citing The Terminator are missing the point of the OP. It is an excellent film, but hardly Arnie's finest hour! He's given very little to do, and is rather wooden in it. He's a lot better in the first sequel, as he has material to play with.
OP I'll disagree with Predator. It is a decent film, and way better than Commando, but I think Commando works better for Arnie as it has a humourous sense of its own silliness, and Arnie plays with that quite visibly. Predator suffers from trying to shovel in some Arnie wisecracks which are pretty inappropriate (notably in the opening assault scene "Knock knock" and "Stick around"...and later with the pointless "you are one ugly motherfukcer" - just doesn't work as well as the classic "I lied" in Commando)