I am surprised this is number one. The Wizard of Oz certainly has it's merits - It's influenced are culture greatly, it's lasted a long time, it's got good make up, it's good whimsical family fun, but it just isn't all that great a movie to me. It's really silly, the acting's usually only okay, it doesn't have any real symbolism or deeper meaning. While Lord of the Rings felt like it was in it's own, real world, The Wizard of Oz is in a sound stage. They don't try to hide it, because they know they can't, and they go for story book-y whimsical sets, which is smart, but it still doesn't measure up.
It's just that I feel that The Wizard of Oz is likable because it's fun and campy and nostalgic, but not because it's actually a cinematic triumph. It certainly knows what kind of movie it is, and it's fun, and it's definitely an important movie, but it's just not that good. The plot isn't really all that great, all the dialogue is silly. Frank Morgan is definitely the best part of this movie, he's hilarious (He's the Wizard), and Margaret Hamilton is pretty fantastic. The transition to color is really, really cool, and all the costumes look really good - You remember the costumes for much longer than virtually anything else in the movie. And it is impressively old.
It does have its good points, but I feel like as an entire movie The Wizard of Oz isn't nearly as impressive as, say, Lord of the Rings. It's stuck with our culture, but it's just fun and old. It doesn't feel like any sort of real movie. It's entertaining, but it isn't really great.