The Wire is almost the very definition of a cult hit. Virtually everyone who has watched it says "This is the greatest show ever!" but virtually nobody has watched it. The latter makes sense - it's dense, slangy, unforgiving to new viewers, and difficult thematically. But hey, that's true for most good stuff. The former - the"best show ever stuff!" is far more interesting.
The reason The Wire succeeds is simple: it figured out a brilliant way to get around the perils of serialization. I've mentioned this somewhat in previous posts about Battlestar Galactica, but not entirely directly. Simply put, it is that the longer a serialized story runs, the more complex it becomes. Following that, the more complex a story, the more likely mistakes, inconsistencies, and retcons occur. Complex settings and mythologies also tend to turn potential new fans away. The most common serialized stories are TV shows and comic books, although long series of novels, video games, or movies can also show many of the characteristics.
Battlestar Galactica offers an extreme example of a story collapsing under its own weight, but that tends to be rare. More generally, the stories continue, though with less emotional resonance and more caveats, retcons, or "reboots:" major events which exist to clean up the complexity.
In a sense, The Wire successfully avoids the perils of serialization by rebooting every season. Each season has a different antagonist, similar to Buffy's "Big Bads," but the significant difference is that The Wire also changes the show's focus each season. In doing so, they introduce new characters and new challenges, and leave older characters behind. It also focuses on different aspects of life within the city of Baltimore.
The first season is fairly straightforward, with the cops and the drug dealers at the center of the story. The second season expands to include a group of dockworkers, bringing the economy into sharp focus. The third season expands the focus on politics, at City Hall and within the larger police and drug communities (leading to some hilarious moments of gangster ComCil). The fourth season makes arguably the most dramatic thematic shift, bringing education and the children of the drug game to the forefront. Finally, the fifth season (which I haven't seen) is supposed to build the media into the show's setting.
By altering the focus each season, the show's writers can construct satisfying character arcs as well as grand plot arcs. Instead of seven seasons of variations on Buffy feeling overwhelmed by her Slayer responsibilities, or Mulder a half-step away from being able to expose the conspiracy, we actually get endings. McNulty figures out a way around his martyr complex in season three, and then is quiet in season four. The European drug-runners of season two shut down their operations in response to massive police pressure, and they stay shut-down for well over a year.
It's a risky way to go about things - introducing characters and stories, then eliminating them when they're done, but it's a great way to ensure that a serialized story has satisfying endings.