The Subway Wars. Several characters start up Subways joints in the area, and things come to a head when Pat resorts to dirty tactics to get Lyle shut down. Vlad looks at Pats website (yes, Pat actually build a website for his Subway, complete with message board). Vlad, appalled by both the tacky web-design (including embedded MIDIs) and Pat's general arrogance, gets into a Flame War with Pat. Pat finally figures out how to ban Vlad, but the robot has the last laugh; he crack the site and turns it into a haven for white supremacists.
On the topic of funny arcs, how about the brief storyline where Little Nephew tries to establish a world record by (very) slowly driving a 1973 Honda Civic into a lake, with the Running Gag of Ray conspicuously missing the round-the-clock news coverage?
Ray's short-lived venture into porn production. Teodore's comments on each scene are hysterical.