I enjoy this series. It does have much more continuity than other horror franchises, but, as mentioned above, the way it introduces characters in one film and then dispatches them in an instant in the next is very annoying.
My ranking would go:
Phantasm IV: Oblivion
Phantasm III: Lord of the Dead
The first two are nearly equal in my opinion. III & IV are both just decent to me, but I like IV more because of its interesting ideas and the use of unused footage from the original to help tell its story. But it's a movie I find myself wanting to like more than I actually like it. III was too silly for me, but it's still watchable.
I've heard this series compared to the Alien series in how it changes up tone and genres from film to film. I'd have to agree, for the most part. The first is surreal horror, the second is an action film, the third is a splatter comedy, and the fourth goes back to the tone of the original. The strange thing with this series, unlike Alien, is that it all came from the same writer/director. I guess he was just going through different phases of what he liked.