It's hard to chose just one. Here's a list of the nicest by category.
Note that they're all very expensive, even for international standards.
Japanese: Jun Sakamoto (sushi mostly, undisputed)
Portuguese: Antiquarius (go for the "bacalhau" (cod fish) dishes)
Churrascaria (barbecue): Rubayat (many addresses, all superb)
Rodízio (churrascaria, all-you-can-eat): Vento Haragano, Jardineira Grill, Fogo de Chão (a tie, they're all great).
Spanish: don Curro.
Seafood: Figueira Rubayat (great meat too, but it's also the best seafood in town, and that's a lot).
French: Le Coq Hardy (very traditional, great food)
Arab: Brasserie Victoria
Italian: Fasano (traditional, luxurious and really, really expensive)
International, contemporary food: D.O.M. (new, trendy and even more outrageously expensive)
Argentinian: 348 (that's the name of the place).
Less expensive categories. Most runner-ups for the best restaurant categories above are way better than those below.
Pizza: Cristal Pizzaria.
Italian "Cantina": Speranza
Hot-Dog: The Fifties
French "everyday" Bistrot: La Tartine
Hamburger: Hamburgueria Nacional