Let's not get hysterical. This canon, the one we're voting on, doesn't have any Buñuel, Chaplin, Lang, Kurosawa, Bergman, Tarkovsky, Ozu, Rosellini, Kubrick, Hawks, Godard, Visconti. It doesn't even have any Hitchcock.
It does, however, have the perfectly enjoyable and middlebrow "Working Girl", the atrociously crafted "Boyz N' The Hood", the middle-of-the-road actioneer "Casino Royale", the competent "Marathon Man" (arguably only the third best film to open in January 1976 after "Network" and "The Outlaw Josey Wales" and I voted for it). It has "E.T." but not "The Wizard of Oz", "All About Eve" but not "Sunset Blvd." and Disney's "Beauty and the Beast" but not Cocteau's. It's a great list of movies to watch, and it's fun to hear Devin and Amy talk about them, but at least half of them also fail the "500 greatest films" test.
Some commenters above are talking about the film as if it were incompetently made, someone called it inept, and someone said it was a film that is "hard to defend" but the craft alone in "Pennies from Heaven", with Ken Adams's design, and Gordon Willis's camerawork, is as good as many films included in this canon. The technique in the "Let's Misbehave" sequence, for example, is impeccable.
The film fails at the execution of a completely coherent narrative because it isn't trying to do that. The message of the film is not in its story, it's in the separation of sound from image that exposes the artifice of cinema so that we can't be hypnotized in the way we've grown accustomed to movies hypnotizing us. The "Follow The Fleet" scene, also impeccably realized, to me is the heart of the film, as it comments on that desire we have of becoming immersed in the movies we watch - a desire that according to this movie is either impossible or dangerous. I don't know if I agree with either proposition, but I like that they present it in this way, and in the end I voted yes partly because of that, but also for the same reason I voted yes on Reanimator, which is that beyond anything else, I find the movie to be unique, unforgettable, and lots of fun to watch. Is it one of the 500 greatest? I don't think so, but that really hasn't stopped us before.