in no particular order:
Xiu Xiu - “Fabulous Muscles” - Xiu Xiu use melodrama in the way that Werner Herzog or Harmony Korine do - to reach beyond emotion into some abstract realm of ridiculosity. Fractured synths, confused guitar, and grotesque lyrics mouth-shat in a style that makes Bright Eyes sound like Peter Cetera by comparison.
the Gift of Gab - “Fourth dimensional rocketships going up” - In a particularly weak year for both mainstream and indie hip hop, Gab’s first album as a non-member of Blackalicious really shines. Vitamin D and Jake One’s shared production eschews the typical crusty funk breaks of Blackalicious producer Chiec Xcel, favoring more accessible, synth-heavy yet funky beats and allowing Gab to appeal to a wider audience than backpackers.
Joanna Newsom - “the milk-eyed mender” - Man, I was put off by this record for so long - a young girl playing harp and singing in an affected “weird granny” voice. But beyond those superficialities is an incredibly talented young songwriter in the tradition of Kevin Coyne or Syd Barrett.
Brian Wilson - “Smile” - I’ve never understood why non-Wilson diehards were expected to get excited about this - this one’s for the nerds (count me in!). Overhyped for 30 years, it showed up in a different form than the “Sea of Tunes” and similar bootlegs that fanboys (raised hand) have collected for years. It might even work better now than it did then.
Mouse on Mars - “Radical Connector” - this should have been called The Shape of Pop Music to Come. Amazing pop songs presented as glitchy, funky, stuttering cut-ups of samples, synthesizers, and human singers. MoM have always had a pop aesthetic, but this is a whole album of “actionist respoke” - killer head-nodding pop songs breaking through post-Aphex IDM.
Kanye West - “The College Dropout” - The first mainstream backpacker record, it’s smarter, wittier, more creative and interesting than any other hip hop record this year. Certain songs were a bit overplayed in the mainstream media, but there are some gems in there that have never seen the light of radio and BET. A surprisingly great record from the corporate-hop machine.
Joy Electric - “Hello, Mannequin” - The first synthesizer-pop album in a decade that actually stands with the greats that inspired it. 100% made from scratch with a synthesizer - even the drums - with killer timeless pop songwriting that recalls the Smiths, Human League, Magnetic Fields, John Foxx, etc., and synthesizer palying and programming that matches if not trumps Jarre, Tomita, Vince Clarke, etc. Amazing.
Isis - “Panopticon” - Atmospheric Metal? Finally delivering on the promise they showed with “Oceanic,” this is an amazingly dense record - it’s big, slow, lumbering, atmospheric, and yet heavier than fuck, with the atypical metal vocals buried in the mix a la My Bloody Valentine. This is what bands like Mogwai and Explosions in the Sky promised but never delivered.
the Microphones - “live in Japan” - Phil Elvrum is quickly becoming one of the most interesting human beings currently creating anything. Serving as the Microphones’ swan song (he’s now changed the band name to Mt. Eerie and moved in a different direction), this live collection defines intimate - it sounds like there are no more than 10 people in the audience, and it’s a hushed, acoustic affair. None of these songs actually appear on any Microphones albums, yet they’re some of his best works. “Great Ghosts,” arguably his finest moment, is a heartbreakingly simple Nick Drake-esque meditation on the demons within, while “The Blow pt. 2” recalls Leonard Cohen at his most stark and naked.
Ghostface - “the pretty toney album” - Unselfconsciously old school, this is Ghostface’s (minus “-Killah”) finest moment, a collection of your favorite soul/funk samples and his alternately impressive and endearlingly flawed-yet-effective delivery. The only misstep is the mildly revolting sex rap “tush,” featuring the always repulsive Missy Elliot.
Cocorosie - “la maison de mon reve” - They could have been gimmicky as hell, but they’d rather write good songs. Twin sisters - one sings like Tori Amos, while the other plays instruments and makes lo-fi backing beats - who engage in a sort of Rasputina by way of the Carter Family take on creepy gospel, folk, and indie rock. One of the more subtle and overlooked records of the year.
Lambchop - “Aw, come on/No, You come on” - Really needs to be seen as a double album. Lambchop continue to be one of the best bands currently making music, a 14-piece amalgamation of 1970’s country and western and 1970’s soul music. Too bizarre to describe, but almost too beautiful to listen to.
Magnetic Fields - “I” - Easily Stephin Merritt’s weakest album so far, but that doesn’t mean it’s not better than 99.9% of music released in the past 20 years. Merritt is the greatest living songwriter, period (I’m aware that Newman, Wilson, Dylan, and Cohen are still alive 
), and while “I” is more of the same, that means more pop songwriting perfection.
Also rans - records that were good or even great, but ultimately failed to deliver in spite of expectations -
Tv on the Radio - “desperate youth, bloodthirsty babes”
Jason Forrest - “the unrelenting songs of the post-1979 disco crash”
Dj/Rupture - “Special Gunpowder”
Tom Waits - “real gone”
Elliot Smith - “from a basement on a hill”
Modest Mouse - “good news for people who love bad news”
Wolf Eyes -“burned mind”
AC Newman - “the slow wonder”
the Arcade Fire - “Funeral”
Destroyer - “your blues”
Leonard Cohen - “Dear heather”
Air - “Talkie Walkie”
the Walkmen - “bows and arrows”
sufjan stevens - “seven swans”
Wilco - “a ghost is born”
Tortoise - “it’s all around you”
Susie Ibarra - “folkloriko”
the Soft Pink Truth - “do you want new wave or do you want the soft pink truth?”
the Divine Comedy - “absent friends”
Mos Def - “the new danger” (just fucking terrible)