German u-boat development pretty much ceased after 1940 as it was beleived the war could be won with what they already had. The type VII was designed in 1933 and first produced in 1935 - far predating the US Navy GATO class subs - first one was launched in late 1941.
The first XXI was launched in june 1944 and I think there is no question that it was years ahead of any other WWII submarine. As you mentioned, earlier uboats had primitive living conditions, but the XXI had freezers and even showers onboard, an unheard of luxury before then!
At the end of the war the US, british and soviets all snagged type XXI uboats to study and improve their own submarines...
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