1. The Village
No list discussing plot twists good or bad would be complete without at least a passing mention of M. Night Shyamalan, although this mention is rather negative, his plot twists are usually well accomplished and cleverly incorporated into his productions.
The Village, centres around an isolated 19th century village which was set up by the elders who, it is revealed, became disillusioned with the grief of modern day society, reverting to a more traditional time and way of life.
The Reveal: It is however not the revelation that
The Village is actually set in modern day that there is issue with (which I believe is done rather well when taken in isolation). However, it is how early on that the audience learns that the evil lurking in the woods surrounding the village is nothing more than village elders dressed up to keep the villagers from leaving and learning the truth. This development means that the creature in the woods evokes little or no fear from the audience and reduces the impact of the final plot twist.