There can be no denying that Dazed and Confused belongs in any retrophile's library. Its greatness doesn't need to be explained, but I'll put it out there for those still in the dark.
It is a perfect slice of the time (1976). Unlike most modern recreations of the era which tend to exaggerate, this one hits it dead on with intricate details that you'll easily miss if you're not paying attention. The soundtrack, the clothes, the antics all come together to create a completely accurate snapshot of life in your average town in the 1970's. Only Freaks and Geeks (for the very early 1980's) and The Ice Storm come to mind as other fine examples of time capsules.
Much like American Grafitti, it focuses on the characters and the setting much more than the plot. Wooderson's lines are reason enough to watch the movie again and again.
An interesting thought: Are there any movies which were actually filmed in the 1970s which would make a better time capsule than Dazed and Confused? Sure, any early After School Special or Saturday Night Fever will surely supply a healthy dose of the 70's. But, in my mind, there's no other movie that encompasses it all, the whole enchilada - pop tops, school dances and Foghat, better than Dazed and Confused.