The best films are like dreams, because I forget myself, and also lose track of time and space. That isn't quite the same as a film being a good representation of what it is to dream. Most films about dreams seem to misrepresent the experience of dreaming. Inception is the least realistic (bizarrely I think 'realistic' is the right word) cinema representation of what dreaming is like. The Cell is a bit more like a 'real dream'. Visually getting there, narratively not so much.
Martin mentions the Japanese film Paprika, which I haven't seen. Abigail in a post on Inception mentions Eternal Sunshine of the Spotless Mind, which is great but isn't much like dreaming (to me). I like the dream sequences in American Werewolf in London, and I think Spirited Away is probably the film most like my own dreaming experience.
I was describing to my son how I thought Inception should have been, and he said 'You are describing Inland Empire' - by David Lynch, I must see it.
Eraserhead, that's a film that's a lot like a dream. And now I'm thinking of Pan's Labyrinth, because I passed out in both those films - I mean I fainted in the cinema. Perhaps a bit too much like my own subconscious.
And of course the big question which remains is how much all our dream lives differ? Do some people have dreams that are a lot like Inception? Like Avatar? Perhaps that's why some people love them and others are left uncomprehending.
I would be interested in which films are most like your own dreams, and which representations of dreaming in film seem best or most accurate to you. Do our dreams differ so greatly? If so it seems to make all communication impossible.