which movies are better tamil or malayalam(story wise)?

Malayalam movies are much, MUCH better than Tamil movies when they are done properly that is. In the 80s, forget about it. Tamil cinema couldn't even come close to Malayalam cinema. In the 90s, it was the same although Tamil cinema got a little better. In the new millenium, Malayalam films have gotten progressively worse but the same can be said about Tamil cinema. So as it stands today, I would still give the edge to Malayalam cinema primarily because they have the better actors (Mohanlal and Mammooty) and filmmakers (Adoor Gopalakrishnan, Blessy, etc.,).

Both are better. Even malayalam movies are better and even tamil movies. They go together. But the difference is the emoitions which are put out by the actors and actress in malayalam is less in tollywood it's bit more extra. That's all about it.