From a musical standpoint, I agree with you, but remember, the people who voted are in the music industry, and given the times, Sgt Pepper is probably the most influential album of all time, up to that point. George Martin didn't just push the envelope with Sgt Pepper... He created a whole new "postal system!" It's startling to note that Sgt Pepper was recorded in a 4 track studio. And what was on the album absolutely shocked the hell out of everyone at the time.
Mark