I love this movie, and so do my kids (ages almost 2 and 3 and a half). I want to address the minority of commenters who managed to find objectionable content in this beautiful movie.
There are three or four punches thrown over the course of the movie, none of them graphic or disturbing. The villains are not scary - they're muppets, after all. A few people mentioned a scene where Walter (a muppet) tries to go over a fence that turns out to be electrified- this scene lasts about 4 seconds and is not disturbing, resulting only in some shaking, bad hair, a dirty face, and a somewhat dazed muppet who sits up immediately and is obviously not hurt. Unless you have scared your kid in advance by explaining the real effects of a real electrified fence (something I do not advise unless you live on a farm or a high security top secret laboratory), this is not a scary scene.
Most mystifying to me is the commenter who objects to a song "Forget Me", asking "Do you want your kids humming that song?" My first thought was "Huh?" because I didn't recognize the song, even after seeing the movie multiple times. The song in question is sung by a group of muppet chickens, and here are the lyrics: "Buck buck buck buck buck buck, bucka buck buck buck (i.e., they sing it in chicken-ese). I don't know what the real lyrics are, but they are not in the movie, at all.
In the plus column, the movie has catchy, witty songs, hilarious 80's nostalgia for the grownups, and good messages about friendship, loyalty, believing in yourself, and yes, electrified fences.