Someone mentioned The Towering Inferno, and I'm sure the Academy of Motion Picture Arts and Sciences is ashamed now, but they did nominate it for 8 Oscars including Best Picture, and it won in 3 categories (Cinematography, Film Editing and Original Song). (The other Best Picture nominees that year were Chinatown, Lenny, The Conversation and The Godfather Part II, which won.)
I remember seeing the original Poseidon Adventure in a theater when it first came out in 1972 and enjoying it. Though I was only 12 so what did I know. I was unimpressed by Citizen Kane, so that shows you.
I actually watched a few scenes from Return of the Killer Tomatoes being filmed in my neighborhood in 1987, when George Clooney was just a TV actor. I finally rented it a couple of years ago and it wasn't as bad as I thought it would be - it had sort of a tongue-in-cheek humor about itself and I was glad that I finally sat down and watched it.
One of the worst films I've ever sat through was Young Cycle Girls, a.k.a. Cycle Vixens from 1978. Tried to be sort of a teenage-girl version of Easy Rider and failed on every level: inane script, amateur acting, horrible filming and editing, just unbelievably bad in every way. But we got a few laughs from watching it and were quoting some of the worst lines for months.
One film that really deserves some sort of award for bad films is Sextette (1978 ) starring an 85-year-old Mae West and a whole bunch of cameos by famous people ranging from Ringo Starr to Tony Curtis, Alice Cooper, Rona Barrett, Regis Philbin, and many others. Mae West was in her mid-80s when this was filmed, yet still tried to pass herself off as a sex bomb. She looks more like a marshmallow after it's been toasted. It's an insane movie, but at least they dressed it up with some bodybuilders for eye candy. To see them acting as if they find her attractive is worth the price of admission.
Possibly the worst musical is Can't Stop the Music (1980), released just as disco was dying.