Well, I've got a good discussion here for me. Remember, OoT is my favourite, but I thought just about all of the Zeldas were great.
For starters, character development/involvement in the plot. Well, when you think about it, Navi wasn't much involved with the plot. The only thing she did was be the annoying back seat driver (not as annoying as Tatl's bell, however). But, if it wasn't for Navi, Link would have never came to the Deku Tree in his time of crisis (and inevitable death, even if you killed Queen Gohma in thirty seconds with jump attacks and Deku Sticks), or have gone to visit Zelda, or be able to learn about the boss' weak points. However, being directly with the plot, the only plot twist she was involved with was leaving Link at the end of the game and joining Link at the start of the game.
As for Midna, she was quite involved. Is it me, or does her character development seem similar to Linebeck's (selfish at start, very involved at the end, which I think Tatl did that as well)? However, it is that that makes her stand out. She, at first, only used Link as a pawn (someone to do the work for her), not as an actual person. However, it is at that breaking point that she does, in the end, decide to help out Link's and her own causes. However, when you consider it this way, Navi was on Link's side the entire time. Referring to the previous sentence, it was that move that made Navi lack character development, because she knew everything about you and you didn't need to know much about her in the first place. So, for plot/character development, I would have to say Midna won this round.
Now, when it comes to usefulness, there is a bit of a breaking point here. Midna helped you out throughout the quest by saving you from being a wolf for eternity and warping you, but Navi tells you the weak points of each boss/enemy (unless she doesn't know) and helps you target an enemy. So, like I said, there's a breaking point. All of those events are a bit important, but Midna's seems to be a smidge more important, even though I am about to say that both of them win this round.
So, as for who I prefer more? Character wise, I prefer Midna. Usefulness, I prefer both. Yet, Navi actually had that heart-felt feeling towards Link (in a way) that Midna didn't really expose. Then again, Midna helped fight Ganondorf. Yet, I'm still picking a tie for that. Being the OoT fanboy I am, I would have to say Navi, but in general, I would have to say that both were actually pretty awesome.