This most famous, and probably most beloved of the Narnian tales was the first one written, and probably the best place to start. I have heard that the author wished for children to read this book first and then go back to The Magician's Nephew afterward.
The Magician's Nephew, although chronologically first in the series, should probably be read after The Lion, the Witch, and the Wardrobe.. (Even as children should probably be introduced to the story of Christ and his life before going back to the important stories of the Old Testament).
This set of seven books has been a children's classic for decades (and will soon be released as major motion pictures). The action is focused on a small group of children from our own world (Sons of Adam and Daughters of Eve) who are drawn into the activities of a whole separate world - Narnia. The activity extends from our own world, to Narnia, it's neighboring countries, and even other worlds still.