This is a well-paced story with a good initial concept, competent art, and good characters. However, it is also a very bad experience. The impact of movies, manga, and anime that tell a story can often be hyped-up in emotional effect by crossing boundaries. We don't have many boundaries these days, but "Elfen Lied" sure managed to find some to cross.
Any "entertainment" product that works on you in this way by showing you shocking images of extreme brutality generally turns out to be (unless you're a sadist) a highly unpleasant experience. The images created as manipulative sensationalism tend to linger. I will grant that the sensationalism in this anime is a sensationalism for a new century. It breaks new ground--for example an extended scene of a girl who looks about 15 having her arms and legs cut off, and then lying on the ground helpless for a while. And there are lots more similar scenes in this thing, some even more heartbreaking.
The cruel part of some people will revel in this. And that sometimes that's a big part. Each generation arrives into a world it doesn't know and only slowly learns about. If this kind of thing is what the next generation finds pre-existing, some susceptible members of that generation are liable to think that this kind of cruelty is an OK part of the human experience. The consequences of encouraging them to believe that can be horrible. See any history of World War II.
While I was watching it, Elfen Lied became literally the FIRST media experience I've ever had in my long life that made me think that censorship might be a good thing. And after watching it, I found that some of it's cruel images began to haunt me and make me sad all over again. I recommend you skip it. After all:
1) Society has no need for entertainment for sadists;
2) When a show like this takes a "bold leap" into ultra-disgusting imagery, you can be sure someone else will soon go it one better. It may become difficult to avoid images like this in anime in future;
3. It could leave you very cynical and down on humanity, maybe for a long time after you see it.
I'm betting that the mangaka and anime-creators of "Elfen Lied" made a calculated business decision here: The story is good, but we can make it great--in emotional impact on the audience, at least--by thoroughly grossing out some normal people and putting others in touch with their own inner sadist.
After all, money has no history.
