While I always liked 'The Lion, The Witch and The Wardrobe', my favourite Narnia novel has to be 'Prince Caspian'. It's got everything; the talking animals, jokes, brilliant main characters and it's set almost entirely in Narnia.
What I like about it, I think, is that the Pevensies have to deal with returning to a land that's not only hundreds of years older than when they last saw it, but when they themselves are much younger. It's adolescent Peter pulling himself together and being the High King, and Edmund finally redeeming himself that really make me love this book. My only quibble is that I think Lewis is unfair to Susan - but then, I think he often is, as is proven by events in 'The Last Battle'.
It's a brilliant book, but you do need to have read 'The Lion, The Witch and the Wardrobe' first.