"Halloween." It might have been better to let this subplot simmer a while before developing it more fully, but they obviously had to find a way to fit it into the season's larger plot.
"Nobody can be wound as straight and narrow as Giles without a dark side erupting."
The episode isn't as strong as some of what we've seen so far this season, with the multiple villains providing some exciting conflict but the action proceeding pretty slowly and predictably. Still, it's quite interesting in the way it develops Giles. It's a significant fact that this is the first time we've ever seen Giles's apartment. His domain thus far has been the library, and seeing him at his home (and at his most vulnerable) broadens our understanding of the character.
The developments between Giles and Miss Calendar in this episode are quite effective, bringing us from a sweet and funny moment at the beginning of the episode when she's winding him up about the damage she might be doing to the rare book he lent her, all the way to the crushing moment at the end when we realize that their relationship has hit a major setback that can't simply be shrugged off. At the moment, these two are the show's most engaging romantic couple (which is odd in a show about teenagers), and it's pretty upsetting to see them apart now.
"Never Kill a Boy on the First Date" and "Lie to Me," so destabilizing that is a great source of drama.