I go to a German Xmas market almost every year, for the last few years, and so far have been to: Frankfurt, Munich, Dusseldorf, Hamburg, Stuttgart twice, plus a trip to the Ludwigsburg market from Stuttgart.
So far my favourite is Stuttgart. Cologne is also meant to be very good and that's where I'm going this year. Others that I've been recommended by my German family, (as much for the city as the market), are Dresden and Leipzig. Of my above list Dusseldorf inspired me the least.
To help you make up your mind, I've always found this website useful:
http://www.germany-christmas-market.org.uk/
So far, as I only go for 2 or 3 nights, I book according to where I can fly to directly from my nearest airport. Not sure where you're going from or how long for and how much this would influence your decision.
Once you've decided, or got a shortlist, if it's somewhere in Germany I know anything about, I'll try and answer any other questions you may have.