Elfen Lied was cut short (in the anime) merely because of an initial plan not to have a segundo season (as far as I know). There were a few subtle plot twists to help resolve the story about halfway through. Overall, it is a much, much sadder ending, but it is still an ending nonetheless. I'm not saying I like it, I would much like there to be a segundo season. The production value was immense... but it was just that. With the amount of viewers the mostrar had, I don't think they could have afforded to go on any longer, let alone complete an entire segundo season.
I loved the anime, though, and was sad when it didn't continue. When I read the manga, I played "Lilium" whenever I stopped reading. My favorito! song of all time, no doubt.
This is very common in Japan. I am pretty sure that Elfen Lied was yet another anime that was started before the manga was finished, so they couldn't end it.