Annie Hall maybe has more going on when you're watching both films for the first time, but for me Manhattan is infinitely the better of the two on repeat viewings. Think the talking heads and fantasy sequences in Annie Hall lose their appeal after they've been seen once and just seem kinda dated now.
By contrast, rather than appearing dated, the way it's shot in black-and-white makes Manhattan seem timeless. As the OP says the all-Gershwin instrumentals soundtrack helps too.
I just think there are so many good one-liners or reactions from Woody in Manhattan.
I also prefer it despite or perhaps because basically nothing happens. SPOILER ALERT the only change by the end is that Yale has officially left his wife to be with Diane Keaton's character. So they're back together and Issac and Tracey seem to have reconciled at the end too, so there's just a beautiful irony that they've gone through everything we see in the movie only to end up back where they were at the start. OK, Issac quits being a writer on the show to write the novel and consequently has to move to a smaller apartment, but that happens very early on.
A film about nothin', over a decade before the ultimate show about nothin' started, set in the same city too.
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