I like to make recommendations for Hugo nominations in all the fiction categories, but this year I don't feel I've read enough novels and novellas to make recommendations. For what it's worth, however, so far my favorite novel from 2011 is Leviathan Wakes by James S.A. Corey (aka Daniel Abraham & Ty Franck), and my favorite novella is "The Man Who Bridged the Mist" by Kij Johnson.
On the other hand, I've read over 150 short stories and novelettes from 2011, so I'm very happy to make recommendations in those categories.
MY FIVE FAVORITE SHORT STORIES OF 2011:
Aliette de Bodard, Shipbirth (Asimov's, Feb '11)
Nancy Fulda, Movement (Asimov's, March '11)
Jeffrey Lyman, The Hanged Poet (IGMS, June '11)
Patrick O'Sullivan, Maddy Dune's First and Only Spelling Bee (Writers of the Future Vol. 27)
Ferrett Steinmetz, "Run," Bakri Says (Asimov's, Dec '11)
MY FIVE FAVORITE NOVELETTES OF 2011:
Ian Creasey, "I Was Nearly Your Mother" (Asimov's, March '11)
R.P.L. Johnson, In Apprehension, How Like a God (Writers of the Future Vol. 27)
Adam Perin, Medic! (Writers of the Future Vol. 27)
Matthew Sanborn Smith, Beauty Belongs to the Flowers (Tor.com, Jan '11)
Brad R. Torgersen, Ray of Light (Analog, Dec '11)
The fact that four of my fellow 2011 Writers of the Future winners appear on the list may reflect unconscious bias, but not conscious manipulation -- they really were four of my very favorite stories of the year.
I've listed these in alphabetical order, but out of all of them, my single favorite novelette of 2011 was "Ray of Light" by Brad R. Torgersen, and my single favorite short story was "Movement" by Nancy Fulda.
For more excellent short fiction from last year, click on the "Story Recommendations" label below.