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First of all I'd like to say that this issue is very interesting to discuss. Many famous philosophers, politicians, historians have tried to elaborate the idea of model state since ancient times. Even today there is not a general notion.
I will try to express my views on a model state. Speaking about the form of government I should mention that there exist two main types: republic and monarchy.
Monarchy is a form of government in which one person has the hereditary right to rule as head of state during his or her lifetime. One the one hand this form of government means that all power is concentrated in the hands of one person - the sovereign. His absolute or even limited power leads to negative consequences. He may abuse his authority and it is the nation, which suffers from such actions. However this situation is very rare nowadays. Today absolute monarchy is preserved only in a few Arabian states.
Constitutional monarchy is more widespread in the modern world. The power of the monarch is limited by constitution and Parliament, which plays a very important role in conducting the policy of a state. The monarch is merely a symbol of the country. He reigns but does not rule. On the other hand monarchy is appropriate to some states. For instance the states with a huge territory are to be controlled by a strong centralized authority. Besides, the mentality of some nations requires a strong and single ruler.
Republic is a form of government in which people rule by electing their representatives, who reflect the interest of the whole society. There is a separation of powers: the legislative, the executive and the judicial. However this form of government does not exclude the abuses of power and often reflects the interest of the ruling classes, not of all citizens.
From my point of view it doesn't matter which form of government the country has. The conditions of life, the rights and privileges of individuals are much more important. I mean that the main goal of every state is to provide security and public goods to each person equally. Today we can see that the conditions of life in monarchies like Great Britain, Denmark and Sweden is higher than in most prosperous republics. As for the role, which the state ought to play in social life I think that government should not regulate every aspect of people's lives. Tere must be some freedom in cultural and spiritual spheres of life otherwise it will lead to totalitarianism.
Unfortunately there is no ideal state in the modern world. This may occur because people themselves are not ideal. But there is a hope that people will become better and even ideal in the future and our descendants might create a model state. Who knows?
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