I guess it depends on what you mean by "better".
The traditional way needs a pipe, the penstock, feeding as much clean water as possible from as high as possible directly onto a pelton turbine, which is connected to a generator.
The drawbacks are that the water must be a clean a possible and you should use all water for maximum efficiency. You also have to source a decent pelton turbine.
For the ecosystem of your stream/river, this setup usually prevents fish travelling past your power plant. It seems to be general permaculture knowledge that the nutrients, which get washed out into the sea travel back up in form of small snails, crayfish and the like, which, it is believed, play an important part in keeping a land healthy.
A fairly new (about 10 years) system is known under the cumbersome name "gravitation water vortex power plant", where water is fed into a pool tangentially to the edge of the pool. The water forms a vertex, as in your bathtub, and blades are inserted into the vertex to slow down the rotation. The blades are connected to a generator and give you the electricity.
vortex power plant http://upload.wikimedia.org/wikipedia/commons/0/00/Wasserwirbelkraftwerk.jpg
The picture explains everything, but you can also watch it in action.
Since the water is fastest at the edges and slowest near the centre, fish and other freshwater creatures can travel past your power plant. (Also, not really applicable when you already have a waterfall, you don't need a large "head", i.e. a large difference in height.)
As a very rough estimate, a small stream (maybe 2-3 meters wide) can provide electricity for several households.