Pesci is a fine actor, and probably underated. I think it's rather a shame that he seems to have been type cast a little. I'd like to see him get the lead in a film rather than the kind of 'sidekick' roles he often (not always) gets. Casino and Goodfellas have rightly been pointed out as highlights of his filmography. I particularly like the scene in Casino when he meets Ace (De Niro) in the desert: "You only exist out here because of me!".
He gave a brilliantly understated performance in Raging Bull. He explodes into rage only once (to beat up Frank Vincent's charactor) making it all the more shocking. He looks genuinely scared during the "did you F*@K my wife" scene and played the short reunion with Jake at the end of the film beautifully. He actually lost weight to play this scene in contrast to De Niro's near four stone gain.
To anyone who hasn't seen Raging Bull, buy it now, it's a true masterpiece.