Pickleloaf, I don’t know if you listen to the Mondo Movie podcast but Dan and Ben asked for some suggestions from Bollywood movie fans and they picked overwhelmingly this one:
http://www.amazon.com/Sholay-Dharmendra/dp/B00009W8OZ/ref=cm_lmf_tit_1
They did a review of it on one of their shows. I’m sure it’s in their archives.
As for my two cents, I went through a phase where I watched a bunch of them. There are an insane amount available on Netflix. Anyhoo, I kind of stuck to the Indian reduxes such as the Bollywood Fight Club, Zinda (Bollywood Oldboy), and the Bollywood version of The Eye. I can’t really remember the names of any of them. I also watched a film which was a lift of Reservoir Dogs/Usual Suspects. What’s really bizarre about most of these titles is that they were really dark and violent, and then all of the sudden, these hardcore badasses would breakout in the sweetest song-and-dance that you’ve ever seen.
Mondo Macabro, the US label, released a the Bollywood Horror Collection Vol.1 and Vols 2 and 3 are forthcoming. Vol. 1 is mucho fun, and Vol. 3 is to contain the Bollywood Nightmare on Elm Street. I posted about it somewhere here on the CD boards.
After Slumdog, expect a lot more Bollywood films to hit these shores. Late.