According to Highway Highlights - these are what they rate as the top 10 towns in Minnesota:

10) Stillwater, MN
9) Pipestone, MN
8) Grand Marais, MN
7) Red Wing, MN
6) Biwabik, MN
5) Elba, MN
4) Taylors Falls, MN
3) Elly, MN
2) New Ulm, MN
1) Duluth, MN

They detailed the reasoning behind the chosen cities and you can read all about it here: Top 10 Coolest Towns in Minnesota