A variation on the 'repelling evil spirits' theory  and one which I like goes as follows.

The Sheela na Gig was carved and placed on the outside of buildings such as castles and churches to attract evil spirits away from the castle and church doors and thus prevent the evil spirits from entering the buildings.  

In medieval eyes, nakedness and sexuality were seen as evil and were appropriately represented by Sheelas (This reflects stories of Eve tempting Adam in the Garden of Paradise).  

However, Sheelas have taken on a new meaning in today's world and now represent liberated women. Sheela na Gigs are seen through modern eyes as being 'defiant' rather than 'deviant'. 

There are many wonderful websites dedicated to Sheela na Gigs. A few of those deserve particular mention here, not least for their wonderful photographs.  See links at bottom of page.

I am now going to indulge myself and offer what I believe is the real meaning of the name Sheela Na Gig.     It is a fact that placenames in Ireland are almost always corruptions of Gaelic words and one has to listen to the placename rather than read it in order to understand it.  It is necessary to hear the name as our ancestors heard it. One of the foremost authorities on placenames in Ireland is Joyce and anyone with an interest in Irish placenames should make an effort to get a copy of his book.  A couple of examples will suffice in explanation of how English speaking surveyors recorded Irish spoken words and came up with the names we use today. 

Example 1.   Many parts of the country have a 'Black Road'.  This has nothing to do with the colour of the road or of the soil in the land around it.  It is a corruption of the word 'Bealach' which means a 'pass' or a 'way' often through hills or over a mountain.   

Example 2.  'Ballybeg' is an obvious  one for me to chose but it serves as a perfect example.  'Bally' is a corruption of Baile meaning a town or settlement,  while 'Beg' is a corruption of 'Beag' meaning little or small.   Ballybeg = Baile Beag. 

So, following this logic of listening to names rather than reading them, a Gaelic speaker can hear the words 'Sheela na Gig' as being  - in Gaelic - Sidhe Lena Gig.  This is pronounced 'Shee Lena Gig'.  Sidhe is the Gaelic for Fairy Woman.  Lena is the Gaelic for 'with her' and Gig is the Gaelic for sexual appendage.  So....  Sheela na Gig is 'Sidhe Lena Gig' and means Fairy Woman with her sexual appendage.  

P.W. Joyce, the foremost scholar in Irish placenames has this to say on page 184, vol. 1, Irish Names of Places, 1901:

"Sidh  [pronounced Shee] as we have seen, was originally applied to a fairy palace and it was afterwards transferred to the hill, and ultimately to the fairies themselves; but this last transition must have begun at a very early period, for we find it expressly stated in the Leabhar na hUidhre [early 12th century] , that the ignorant call the fairies Side [plural].  At the present day, the word generally signifies a fairy..."

Here's a Sheela from my collection.

Ballybeg Sheela na Gig is based on the Sheela from Ballynahinch Castle in Co. Tipperary.   2.25 x 3.25 x 1inch.

	Links
Gay Cannon runs this Great site www.irelands-sheelanagigs.org It is a comprehensive list -with great pictures- of all of Ireland's Sheela na Gigs.		www.sheelanagig.org  is another great Sheela site. This is run by John Harding. Well worth a visit.