I must admit, I always wondered why she acted as she did. Listening to her, I can't bring myself to consider her evil. A bad person, surely, but to me at least, it seems as if she's trying to prepare the kids against a cruel world. Perhaps because she herself got scorned.
Maybe she was an orphan herself, and she's projecting the way she was treated as an orphan as a sort of catharsis, a release if you will. Like she originally was nice as a kid which is why she's nicknamed Grelod the kind, but overtime the way she was treated got to her. That's just my story, or she could just be a mean old lady = ) . I like what Cinderbloomd said.