I vacillate between Tom Waits' early L.A.-folky, mid jazzy-pop, or later avant-noise periods as my favorite. I guess I just like Tom Waits, but if I had to nail it down to one disc, I would go with his Used Songs (1973-80) collection, featuring the best of the (mid jazzy-pop) Bones Howe era and the classic "Ol' 55" from the early period.
Veteran pop and jazz producer/engineer Bones Howe, fresh off his success with the Association and the 5th Dimension, decided that he needed to produce a "significant artist" to round out his portfolio.
David Geffen suggested Tom Waits as such an artist. Howe's background in jazz and pop neatly prepared him for the atavistic beatnik Waits: a singer-songwriter who borrowed nimbly from the noir side of various idioms (cool jazz, beat poetry, folk, Dixieland, cabaret) and funneled them through his mordant and ironic yet romantic imagination, creating an oeuvre uniquely his own.
Howe recorded (mostly live to two-track) Waits' standards like Nighthawks At the Diner, Small Change (with "Tom Traubert's Blues," "Step Right Up," and not on the collection "The Piano Has Been Drinking"), Foreign Affairs (with the Waits/Bette Midler duet "I Never Talk to Strangers," "Burma Shave," "Muriel"), Blue Valentine ("Blue Valentines," "Whistlin' Past the Graveyard," "Wrong Side of the Road"), and Heartattack and Vine (the title track, "Jersey Girl").
Eventually Waits too went his own way, because as Howe sees it, "Every relationship with an artist is a terminal relationship."