One of the weaker movies in the Star Wars series, but that being said, still better than most of the crap being spewed out there these days. Having seen it twice, once with digital film, I agree with Jeffasin. I would highly recommend that if you have the opportunity, it is worth driving a couple extra miles to see the digital version...yes, it makes that much of a difference.
As for the movie itself, it is certainly weaker than episodes 4 through 6, and only a marginal improvement over episode 1. I do not think the Phantom Menace was a bad movie, mind you...sure Jar Jar was annoying, but there were some good scenes, and the light sabre battle was great.
Anakin has grown from being a bratty annoying kid, to a pouty annoying teenager...at least it has been consistent. Natalie Portman is only slightly less wooden. The acting has never been the high point in any of the Star Wars movies, but the original trilogy at least had more likable bad actors.
The good points: most of the action sequences I found pretty thrilling, (although the "execution" scene and ensuing battle didn't impress me), Anakin's suffering on Tatooine, Yoda in action, less Jar Jar and more droids
The bad points: Dooku didn't really strike much fear as a bad guy (both Vader and Maul are far superior villains), slow moving first hour, continuing limitations of CGI (the scenery from the various planets still looks pretty painted, the monsters in the execuation scene were so stilted it may as well been claymation), the light saber duel was too short
There are lots of things that someone can pick on, but that doesn't make it a bad movie. Think of any great movie, and you'll certainly be able to pick out flaws and things that would have made it even better. Star Wars had even more scrutiny given the high expectations, making it impossible to live up to everyone's expectations, but it still manages to be a good movie, if not a great one.