Juno has some of the best character development I've seen in recent times. The character arcs of Jason Reitman and Jennifer Garner are exceptionally well done. The movie has you believing initially that the former is a cool guy and the latter a Stepford wife, and by the end Reitman is the one who has been dehumanized into a caricature, while Garner's character comes alive with nuance. The character arcs of the teenagers don't move much though.

Though not a movie, I think Deadwood, the HBO series, also has beautifully done character arcs, of Shakespearean quality. Al Swearengen goes smoothly from villain to chief protagonist. All the other characters, major or minor, are also very finely drawn, whether or not their arcs move much. One of my favorites is the innkeeper E. B. Farnum, who could easily have stepped out of Shakespeare.

Psychologically believable and interesting character development is, unfortunately, becoming a dying art. We either get stock stereotypes (which may be developed in great detail, like Don Draper in Mad Men, but are not "finely drawn" in my sense of the word), or hagiographic portraits of faux-real characters.

On Mad Men, the character of Peggy is an exception to the rest of the cast, who evolve in somewhat formulaic ways. Peggy is drawn as well as the Deadwood characters.