the Architect was discussing which form of the Matrix was best for keeping people contained, not the best for keeping people happy or giving them what they want.

If you are living in a paradise with all your needs and wishes taken care of with no effort, what are you going to spend all day doing? Probably just hanging out and relaxing and thinking. Its very likely that you will spend a lot of time thinking about very existential things and questioning the world around you. Stuff like that is what leads people to breaking free of the Matrix.

Compare that to the average human living in the 1999 Matrix. There are unlimited distractions in 1999. You could spend your whole life running in the rat race and paying bills and watching mindless tv and never think about the things that lead to breaking free of the Matrix.