One thing I liked about the film is the simple story, or more accurately, the atmosphere. M. Night has always been better at creating a mood than fleshing out a story, but the premise of Lady in the Water works for me: It about people reacting to a fairy tale happening in real life. This concept probably put a lot of people off, the fact of the matter is this concept hasn't been used a lot (but it has been done before, i.e. Peter Weir's "The Last Wave", a deeper and more philosophical film), and people aren't used to it. Like I said, I liked it, but most of my friends thought it was stupid.
The main thing that people hated was M. Night's own acting in the film, and on this I agree. He was without a doubt the worst thing in the film. It was a disgusting example of self-indulgence and self-importance, and more than that, he's just a terrible actor and he should stop.
The one thing that I really had a hard time stomaching was the extended sequences with the party band, Silvertide. They were so awful I wanted to walk out of the movie. Picture a blonde version of The Black Crows with even less talent ripping through and f*(^king up a version of Dylan's "Maggie's farm".
Those few things aside, the rest of the cast was great, I thought the story was simple and decent enough, the "film critic" part with Bob Balaban was funny, but M. Night was asking for it with that one, and the movie as a whole was entertaining.
M. Night started out as the new golden boy of Hollywood with "The Sixth Sense", but many have felt he's lost his touch. The truth is he hasn't lost his touch, he just hasn't grown as a director. With "The 6th Sense", "Unbreakable", "Signs", "The Village", and now "The Happening", he keep tilling the same field. it's getting old. "The 6th Sense" was great, mostly because it was fresh, "Unbreakable" was entertaining for me at least due to the comic book references, but "Signs", "The Happening", and especially "The Village" were just plain terrible. "Lady In The Water" was a nice diversion from his formula, but it's getting tired. Perhaps M. Night would benefit from directing a script written by someone else, and not built around some moronic "twist" at the end, and most definitely not acting in it.