Salo, or the 120 Days of Sodom (Pier Paolo Pasolini, 1975) 
I've seen quite a few "unwatchable" films in my viewing experiences but Salo has to be right up there in terms of a continuous stream of shocking and disturbing scenes and images. It isn't quite as shocking to me as it may be to others but there's no doubt that what's in this film is extreme. But should Pasolini get credit for making a great film because his film deals with rape, torture, and murder? I really don't think so.
Based on a work by the Marquis de Sade, Salo is about a group of Italian fascists who, during the waining days of WWII, take a group of young boys and girls to a secluded villa to do Sadist things to and eventually murder them. The title is also a reference to the city-kingdom Hitler granted Mussolini in northern Italy after his government in Rome collapsed. At the villa, old prostitutes sell sexually extreme stories to get the men aroused. Over the course of many days, the men subject their young victims to an increasingly humiliating series of acts that include cacophilia and ultimately the murder of all the victims. Pasolini uses these acts to remark on the role of sex and power, and directly in regards to corrupting influence of power in Fascism. Pasolini uses that argument as his rationale to show what he shows but I don't quite buy the extent to which he goes. These ideas of Fascism and power aren't that strong in my mind and what the film is left with is a variety of scenes meant to make the viewer uncomfortable.
Where the film does succeed is beyond its content or its message. It has more to do with its execution. There is a dark humor running underneath all the sadism, which creates a tension within the viewer. Taken in context of what is on the screen, it's hard to acknowledge that it goes beyond mere shock. But the film's greatest strength is the awareness it creates in the viewer as an observer of these acts. The film is shot in static shots, at mostly medium to long shots with very few close ups. This creates an idea of "the gaze", the viewer becoming as much as an observer as the camera. It creates a self-reflexive notion in the viewer, and it creates a questioning of whether you should actually be watching this. There's no doubt that Pasolini understands these ideas because the ending is a direct representation of this. As the young girls and boys are being tortured in the courtyard, the men each take turns watching out a window through binoculars. It becomes a direct correlation between the viewer and these characters. Salo is meant for the viewer to examine his or her own feeling towards and it does this by making them aware of how uncomfortable they feel by creating this idea of the gaze. The only other film I've seen that's been close to creating this sense of uncomfortable self-awareness is Dyn Amo, a hard to find British film by Stephen Dwoskin. (This entirely paragraph is heavily influenced by a class I took called 'The Gaze Reconsidered' which dealt heavily with Freud and his notion of the gaze as it applied towards film) These elements in regards to Salo make it a constructive viewing experience, even if some of the subject matter and ideas weren't to my liking.