Mat Ward's Daemons army book was certainly the worst offender but 7th ed VC's weren't far off. HEs and DEs were comparable aside from some truly broken choices in the DE book. Army wide ASF for HEs was just annoying for the most part and their units received some big buffs but this was matched by appropriate points hikes across the board (as awesome as Swordmasters were, you were still paying 15pts for a model with T3 and a 5+ save). Lizardmen and Skaven were pretty OP too but arguably they needed to be to match the benchmark set by Daemons, VC and DE.
5th was the edition I started with and it was certainly a lot of fun. As with 2nd edition 40k, it required some degree of restraint or 'mutual consent' between the players. My first experiences as a Wood Elf player were up against a Skaven player who ran a Grey Seer on a Manticore with the fell blade and an Undead player who ran a Vampire Lord on a Zombie Dragon with the frostblade, carstein ring and black amulet. These guys completely outclassed any characters that I could field and could wipe out entire armies on their own. I started to enjoy the game a lot more when we applied a standard limit of 50pts per magic item (which I seem to remember was recommended by the WD team for standard games). There were actually articles in WD which discussed the use of more powerful magic items and which recommended that they were omitted aside from very large games or special scenarios. I remember the classic line "the forbidden rod should be"

.
Magic was also more powerful than 6th/7th and felt like a bit of a lottery - I didn't like the fact that my undead opponent could conceivably draw irresistable force on the first turn and wipe out half of my army with wind of death. It seemed pointless to have even put my models on the table.
6th kept a lot of the core game of 5th intact and was probably GW's best ever attempt to make a tight and balanced ruleset. The main changes were to introduce greater composition restrictions, reduce the power and influence of heroes and big monsters and to tone down magic. These changes were all pretty successful in my view. The composition system was more elegant and scaled far better than 40k's FOC (don't understand why they didn't port it over in subsequent editions of 40k). The magic system wasn't perfect - some accused it of being bland and certain aspects (such as spells which gave the caster combat buffs) were not as well implemented as they could have been. However, for the most part I thought that magic worked well - potentially game changing rather than game winning. The toning down of characters and monsters was very well implemented as it gave rank and file troops at least a fighting chance against even the most powerful units.
5th is still a lot of fun for the sheer diversity of options. 6th/7th is better suited to balanced/competitive play.