The rule -- which is not always obeyed -- is to use a capital letter for every word, except for words which have a grammatical function. And, of course, you must capitalise the first word.
Here are some examples of book and movie titles:
Pride and Prejudice ("and" has a grammatical function)
The Colour of Magic ("of" has a grammatical function -- get the idea?)
Charlie and the Chocolate Factory
Once Upon a Time in America
Shaun of the Dead
The Curse of the Wererabbit
An American Werewolf in London
Note the capitalisation in this title -- it's a children's book:
Five Children and It
"It" is a pronoun, and normally has a grammatical function. In this case, however, "It" refers to a strange creature that grants the children one wish per day, and has a central role in the book. So in just this one case, because "It" is so important to the story, "It" is capitalised.
- For Teachers