what exactly is wrong or pagan about this holiday?
"Pagan" is the catch-all phrase the WTS uses when it's attempting to cast any "worldly" celebration/observation/practice in a bad and un-christian (read: non-JW) light.
Over time "pagan" has become a cult buzzword among JWs. Just the other day a JW family member cast aspersions on another non-JW family member who was going to a Catholic service by saying, "there they go...off to worship their pagan god...". To the JW mind, anyone not worshipping "Jehovah" as they do is "pagan", even when the non-believer claims to be Christian. The Catholic god and his representative, the Pope, are pagan because they're not the one true religion. Therefore any practice that they observe, be it religious or just traditional becomes, by association, "pagan".
I remember when I was active and believing, saying similar stupid and ignorant shit. It really stands out to me now when I hear JWs use the word incorrectly.