I believe Gregory McGuire created the name based on the initials of L. Frank Baum, original author of The Wonderful Wizard of Oz. I think one of the reasons it works for the "wicked" witch is that it's so ugly sounding.
Wicked aside, I think it's a terrible name. The "elf" sound, the "buh" sound at the end of the name, the fact that I think "elephant" when I see it written out-- all reasons it's awful IMO. Unless the baby is born green, I'd scratch this name.
Made up names form literature work sometimes, but I don't know that the world is ready for little Elphabas yet.