would have been much better in black and white

It's possible to get a kind of a monochrome look, but with subdued, carefully arranged color. They did that pretty well here. It's the best of both worlds (B+W and color) if they can do that right.

Another film which does that is "Pennies from Heaven" (1981) with Steve Martin, which was set in the 30's; CotJS is actually set in 1940.

hmm, now that you mentioned it...

true... true

Funny you should mention that - I have tested that theory out and I do believe you're right. And, if it wasn't for DreamWorks' contract that restricted Woody from making any B&W films, this probably would've been his B&W film of the 00's.

To do so properly, on any computer DVD Player you should be able to adjust the colour settings somewhere in them (eg on a Mac's DVD Player, it is under Window - Video Color)... turn the Saturation all the way down and turn down the Brightness just a bit and the Contrast up just a tad and that's what it would look like in B&W. Pretty nice, IMO. Woody, of course, would vehemently disagree, but then again he might encourage any experiment to make what he views as his worst film a little more interesting. ;)