Definitely definitely definitely Nicholson. I mean he was AMAZING. He was the perfect character in a classic Batman movie.
Here's another one: Ledger as the Joker or Schwarzenegger as Mr.Freeze? (Extremely rhetorical) (Extremely).
The only reason this one was so well received is because people love Heath Ledger (by people I mean mostly girls) and most of the audience aren't true Batman fans. I don't care how stupid it sounds, I am a true Batman fan. I love the original cartoon, the really old movies, and the not so old movies. However, I can't say I enjoyed Batman Begins. There was not enough action or mystery (like the classic Batman moves, Forever, Returns) and some original Batman concepts were ruined. The bad guy wasn't nearly as cool either.
An important note: wasn't Nicholson the Riddler? They're different. The Riddler's funnier.
And about the whole Ledger-Oscar thing: it's because he's dead. This has happened before to numerous others.
Edit:Thanks, Dakare. Ok, so the Riddler and Two Face were in Batman Forever, the Joker was the first Batman in 1989. Batman Returns was the Penguin (also an awesome villain) and Mr.Freeze was the villain in Batman & Robin.