Prison Island and the high level mobs in Satorl Marsh (the Quadwings that appear at night,etc) are your best bet. That said, grinding is not required in Xenoblade. I beat the game at lvl 76 once without ever having to grind. You just need to use the mechanics the game gives you (gems, skill links,...). So if you don't want to grind, don't. If you'd rather grind, go ahead.