Probably the best so far, but certain aspects nearly ruin it.
There are several new modes, like coop career, and battle, although there are significant downsides to both. If you are a solo player, there is one song in each bracket that can only be unlocked in coop career. This really sucks if you don't have the money for a 2nd guitar, or don't know anyone else to come over and jam with. The battle mode sounds pretty fun, in theory, although it's more about screwing your opponent than playing really well in order to defeat them. The first player to make the other fail the song wins, using powerups obtained by hitting note sequences. Once you gain the whammy bar powerup, however, they are basically doomed. Even if you find the difficulty of the songs themselves to be tolerable, the boss battles in career mode will frustrate you to no end. The computer played bosses will hit every note unless you can gain powerups and mess them up, but if they get them first then you'll never be able to win. It's a poorly designed system that detracts from the fun of the game in my opinion. Most importantly, you can't move on until you've defeated them.
If I was to pick up guitar hero 3 having never played the first two, I might find myself smashing my head against a wall somewhere, due to the overwhelming difficulty of hard and expert mode. In comparison to the last title, which I had no problems beating on expert, this one is a whole new breed of guitar challenge. Easy and medium are still very reasonable, beatable in an afternoon by any returning GH player. Even hard isn't too bad, until you get to the guitar battle with Slash. From there the songs get quite a bit harder, some to the extent that your hand is actually in pain from the awkward shifts and constant pounding of plastic frets. Expert mode is, as you might expect, not much harder than hard mode, although you'll be really feeling the stress when you get to the last several waves of songs. The final song, which isn't even technically part of the game, is the Dragonforce tune "through the fire and flames". It's about 8 minutes of pure insanity that you can play during the final credits after you beat the game. If you can handle this track on expert, you might want to think about buying a real guitar, because you sir, have some skills.