I've been to both Kerala and Madhya Pradesh. I think you should go for Madhya Pradesh, Ujjain... its like stepping in history. Its a beautiful city, specially the aarti on Ram Ghat, and the charm of the streets and buildings, just offer some sort of calmness. And how cam we not mention the Mahakaleshwar temple and Shakti Peeth.
From my experience, I'd say Kerala. I did a week-long backpacking trip, starting from Calicut, through Kottayam, Kochi and Alleppey, and visited Kannur while coming back. Alleppey especially is breathtaking around August time, and you can pre-book a night stay on a houseboat.
Both states can be visited based on from where you are travelling. Madhya Pradesh also has many hidden destinations like Amarkantak Origin of Narmada River followed by Dhuadhar Falls at Jabalpur. Depending on your travel interest you can decide between the states.