The story concerns a boy named James Henry Trotter, who is forced to live with his cruel aunts Spiker and Sponge after his parents are eaten by a rhino. But soon a mysterious stranger appears and gives James a bag of magical ingredients that cause a peach and a group of bugs to grow to enormous size; upon entering the giant peach, James changes from child actor Paul Terry to a stop motion rendition thereof. But even the film's live action sequences have a strong cartoon aesthetic, particularly the dreamlike vision of 1920s America reminiscant of Maurice Sendak's "In the Night Kitchen".
All of this kind of flies in the face of the novel, which relates James' weird adventures in a totally matter-of-fact way. This is a prudent decision on Selick's part as, in the end, the dry tone is what really hurts Dahl's book. James makes his way through a string of set pieces that are sometimes quite outrageous, but always feel a little shallow and half-baked; the story never truly takes off. The movie's live action opening suffers from this problem, but the animated meat is positively high flying; the mechanical shark that attacks the peach makes for a great action sequence, as do the skeletal pirates led by Jack Skellington in a cameo role. There's even a dream sequence rendered in cutout animation - think along the lines of Terry Gilliam by way of Tim Burton.
But the movie is still sorely lacking in other areas. The forgettable songs, the only half-dencent one of which is taken from a poem in the book, are a definite step back from Nightmare's soundtrack. The characterisations are perhaps a step up from the novel, but still lack the chemistry and development to support a whole movie. The filmmakers have tried to deal with the story's weaknesses, but the results are extremely unconvincing; in an effort to flesh out the story, a "follow your dreams" message has been added. In the beginning, James' parents tell him that someday he'll visit New York, the "place where dreams come true". James keeps this fantasy throughout his stay with his aunts, and, of course, eventually lives it out.
Now, a kid in James' position might well want to visit some exotic locale, but his chief desire would more likely be to get away from his aunts and make friends, something he does when he enters the giant peach. Dahl's story is an obvious piece of kids' wish-fulfillment fantasy, and this subplot runs at odds with it; when the story reaches its climax, the movie is in a hopeless muddle.
In the end, it's hard to really call James and the Giant Peach a good movie. It's a visually stunning film, yeah, and probably the only movie to include a credit for "lead peach fabricator", and it's definitely not a bad film, but the storyline is just too poorly judged for the film to be up there with The Nightmare Before Christmas.