I think it is interesting that what most of us seem to consider evidence of good acting is at least partially dependent upon the writing that the actor was given. Consider: if Amy Acker hadn't been given the role of Illyria -- if Fred had just died and been dead -- would we all be as impressed, or would we have considered her acting skills as somehow less well-honed simply because she wasn't given the chance to shine? Of course, there is the flip side to consider: did the writers consider the actors' talents at all when writing? Is it possible that plots depicting great emotional range were only given to actors whom the writers felt could handle it?
When I consider this question, I always think of DB and JM. Their roles -- the vampires who sort of walked the line between good/bad -- were very similar. Between the two, though, JM was given much more emotionally complex material. The line between good and bad was much more clearly delineated with Angel/Angelus. With Spike, JM had to incorporate endless degrees of nuance and subtlety. He also had to do some really difficult scenes, like the attempted rape scene and the post-soul insanity. On one hand, it is possible that DB is the better actor, but the plot and the split personality kept us from seeing a lot of the middle ground (which, to be fair, we explored more thoroughly on his own show). On the other hand, it is possible that JM got more complex material because he is the better actor. I think the answer is somewhere in between. I think that plot and characterization as determined by the writers do obviously limit what we see of an actors' range, but I also think that the writers do take into account an actor's abilities when they pen a difficult scene or story for a character.