I really like the character arcs I know some people have mentioned these points but hey...
Angel
In this season Angel has had to face the innerbeast, this arc he does it literally. It also challenges the concept of self esteem and how people may perceive you which Cordy has a little bit of. It's interesting that earlier in the season the fauz swami talked about having a reflection in those around you. This is true in Pylea as people begin to see him as great hero without any of the ambiguity he faces at home. He can also literally see his reflection but he also sees the monster in his purest form. Wes tells him the demon isn't him while the faux swami says it is him. Either way, the key is think like a self possessed individual, if he believes he can face the beast and come back then he can use it to help people.
Cordy
Cordy gets a job in a commercial. It seems glamourous but her self esteem hits rock bottom. She wanted to act but ends up being a 'tool' to be exploited and all this from th girl who never takes crap from anyone? When in Pylea she is shoveling demon horse poo and is even called ugly. Again she becomes another tool and not even a glamourous one and then all of a sudden, wham, she's a princess, but she finds out she's another tool of exploitation. She doesn't succumb to being 'sexually dominated' and becomes truly liberated.
Gunn
Good old Gunn doesn't make the same mistake twice. Rondell died because he wasn't there for him, but he isn't about to let the same thing happen to Cordy.
Wes
Before they go Wes doesn't seem a confident leader. He lets Angel formulate a game plan, he dithers about what to do about the drokken and spouts useless information about the Hacklaar with two 'a's. In Pylea as someone said already he becomes a stronger leader, adhering to WC's bigger picture tactics. He also gets Angel to believe in himself, to believe he'll come back after turning into the beast.
Lorne
He had to come back to realise he didn't have to come back. Aggie, his psychic friend may have been right about one thing, they needed Lorne's help, and that was part of his journey. He didn't belong in Pylea and that's ok, he needed to rid himself of that conflict
I really enjoyed everyone's little journey of discovery