So far, this thread's thrown out a lot of the bigger, more visible titles, which I'm okay with, but I get the feeling a lot of weirder or indie titles are slipping under the radar. The best Steam game is going to be a point of a million hours of contention, and subject everyone to their fair (and unfair) share of debate on the topic. If you want my opinion on the matter, I'll simply point you toward Mass Effect and be done with it. With honorable mention to Mass Effect 2 and KotOR.
However, since going that route is going to provide even a bit of inter-Bioware squabbling, I'm going to point my finger at some of the best games on Steam, and why.
Alien Swarm gets a mention right off the bat because it's a solid gameplay mechanic with several difficulties, weapons for all play styles, and is easy to organize and play through a couple of times with different friends. And it's free. Polished, diverse, and fun, without even touching your wallet, and is such a format that you can play it with nearly anyone, as almost anyone can run it, and it's freeware.
Beat Hazard (Ultra) is a music game that resembles Geometry Wars except is powered by tracks the player selects. It uses music from one's own harddrive, so the soundtrack is guaranteed to fit the player's taste, and the gameplay mechanics are a joy to spend either minutes or hours playing at a time. Be warned, though, as this game is bright and flashy. Special mention to Audiosurf as well, but is more of a racing/puzzle hybrid rather than a shooter.
Chime is an example of a simple mechanic made good through polish. The concept is an odd mixture between Tetris and Lumines, with music as part of its core mechanic. It's a good game, and certainly worth the cost of entry.
And lastly, for those of you who haven't given it a shot yet, Torchlight is good fun. Very Diablo-esque, but more updated for modern play styles. Definitely worth a look. Honorable mentions here include Deathspank, On the Rainslick Precipice of Darkness, and Magicka.
Also, look through the SEGA Classics (specifically Shining Force, Gunstar Heroes, and the Sonic games) for some cheap games that are still really solid.
There are more out there, but I'm trying to keep this post relatively short. So, there are some of my recommendations.