Oliver! Is one of my favorite movie musicals and I don't think it needs to be remade. That being said, the answer to why remake it is simple. That is to bring it to a new audience. In time, films get forgotten by larger audiences. Sure they can rent them or buy them on DVD, but they don't think to go looking for them. When a film is being remade the new film gets a lot of attention from a new generation, but it can also rejuvenate interest in the original film that is being remade.
Another example: my two cats are named Nick and Nora. When I tell friends this, they assume they are named either after a popular YA novel, or after a line of pajamas sold at Target. Sadly, none of then are familiar with The Thin Man film franchise. If the proposed remake of The Thin Man really dies come into fruition, people will no longer look at me blankly when I refer to the title. They will be familiar with the new film, and may have taken time to seek out the original.
I have known several people who love the film Scarface. When they find out it is also a remake they often seek out the otiginal film produced by Howard Hughes. Eleven years ago when The Texas Chainsaw Massacre came out, we all gathered to watch the cult classic before journeying to the theatre to see the new version, the same was true for A Nightmare on Elm Street. For those of us who are fond of the originals remakes rarely live up to our expectations, but that may not be true for the newbies. That is why films should be remade, besides a remake never takes the original away from us.