I agree about Vampyros Lesbos being horrible. Vampyres and Daughters of Darkness, though both very flawed movies are, are much better films to watch in that genre. Still, as terrible as it is, VL is still a cult film.
Is "psychotronic" a better term to use? The trouble with "cult" is that it suggests that any movie that has a rabid following could be in the category. Is Sound of Music a cult film just because people occassionally fill up movie theaters and do sing-along viewings of the film? It is debatable.
Sound of Music most certainly is NOT a psychotronic film, however. But Braindead, Evil Dead, Vampyres, Flesh Gordon and Female Trouble ARE psychotronic.
Anyways, I have seen this debate about cult films occassionally crop up and usually it is resolved by switching to the "psychotronic" terminology because that seems to do the trick of preventing mainstream films from sneaking into the list of "cult" films.