8.6, it lets you run everything you can run on OS9 without the overheads. The RAM requirements for OS9 almost doubled with no real advantage unless you had a G3 or G4 Mac. 8.5 and its update was the last version of the Classic Mac OS that was designed with PPC processors in mind.
EDIT: Just a note that I remembered that you will need the "wish I were" control panel to force an install of OS 8.5 and above on a machine such as the Q700 where you can still actively access the 68k processor with the machine turned on. Obviously if you install 8.5 and above you will no longer be able to run 68k apps and you will need to run the install from inside OS 8 or OS 8.1 to get it to work and you will need to do some res hacking.
http://www.lahainacomputer.com/sites/upgrade/upgrade.html
Wow wait, a Q900 with PPC upgrade can't run 68k apps in PPC mode?