I would agree with a lot of the reviewers thus far about this movie. If you didn't see it when it first came out (and if you weren't between the ages of 5-10) then the magic will be difficult to grasp. Which is the irony of the movie. It's about imagination disappearing, and people forgetting to dream and remember what it was like to be a kid.
Nevertheless, it is a good movie. The wolf might scare the kids, I remember it being rather spooky when I saw it at the age of 8. And of course, the effects are. . . ohhh, slightly dated, but they hold up. The only thing that simply STINKS about this DVD release is the lack of extras, (I guess we could call it the Nothing). Because it has none. Big disappointment. Where is the cast and crew? Why didn't the director put in some time with this movie and give us a commentary, or behind the scenes, or even cut scenes? Wasn't this a classic. . . ? As far as I know the director hasn't been up to too much lately. It's a shame, it's a classic for those who grew up in the 80's, it did leave it's mark culturally, and I'm surpised nobody from the cast/crew decided to do anything for it when it released. It may have DVD quality, but not the quantity. I only paid 10 bucks for it, so, in the long run it was worth it.
In the meantime, if you want just a movie purely for imagination, then buy it for your kids. It sure beats all the slop the movie industry has kicked out recently for "childrens entertainment".