Here are what tests show about Sodium Lauryl Sulfate:
(1) SLS PENETRATES EYES AND TISSUES. Tests show that SLS can penetrate into the eyes as well as systemic tissues (brain, heart, liver, etc.) and shows long-term retention in those tissues. Especially when used in soaps and shampoos, there is an immediate concern relating to the penetration of SLS into the eyes and other tissues. This is especially important in infants, where considerable growth is occuring, because a much greater uptake occurs by tissues of younger eyes, and SLS changes the amounts of some proteins in cells from eye tissues. Tissues of young eyes may be more susceptible to alterations by SLS.
(2) SLS FORMS NITRATES. When SLS is used in shampoos and cleansers containing nitrogen-based ingredients, it can form carcinogenic nitrates that can enter the blood stream in large numbers. They can cause eye irritations, skin rashes, hair loss, scalp scurf similar to dandruff, and allergic reactions. 
(3) SLS PRODUCES NITROSAMINES. (potent carcinogens that cause the body to absorb nitrates at higher levels than eating nitrate-contaminated food like hot dogs or lunch meat): Dr. David H. Fine, the chemist who uncovered NDELA contamination in cosmetics, estimates that a person would be applying 50 to 100 micrograms of nitrosamine to the skin each time he or she used a nitrosamine-contaminated cosmetic. By comparison, a person consuming sodium nitrate-preserved bacon is exposed to less than one microgram of nitrosamine. 
(4) SLS STRIPS MOISTURE AND OIL FROM THE SKIN. According to the Journal of Investigative Dermatology, SLS produced skin and hair damage, including cracking and severe inflammation of the derma-epidermal tissue. Skin layers may separate and inflame due to its protein-denaturing properties. 
(5) SLS IRRITATES SCALP AND MAY PROMOTE HAIR LOSS 
(6) SLS CAN DAMAGE DNA IN CELLS - according to Japanese studies. 
SLS and all its cousins are very harsh detergents that strip the skin's moisture barrior (which is linked to immunity and skin health) and causes serious health problems during testing on animals. It is linked to harming children's eyes, denaturing protein (thereby possibly contributing to hair loss or thinning), and combines with DEA, MEA and TEA (often found in the same shampoo) to form nitrosamines, a potent carcinogen. Since it is only included in products because of its potent foaming action, the question you must consider is:
What's more important: the foam or your health?
You CAN choose healthful alternatives:
Dare to Care What Touches Your Skin and Hair!
References for the above information:
 Green, Dr. Keith. Detergent Penetration into Young and Adult Eyes. Department of Ophthalmology Medical Coggege of GA, Augusta GA
 Hampton, Aubrey. Dictionary of Cosmetic Ingredients. Organica Press Metarasso, or Hampton, Aubrey. Natural Organic Hair and Skin Care. Organica Press, Tampa FL
 Journal of Invest. Dermatology, 32-581, 1959 "Denaturation of Epidermal Keratin by Surface Active Agents"
 Wright, Camille S. Shampoo Report, Images International, Inc. 1989
 Vance, Judi. Beauty to Die For. Promotion Publishing, San Diego, CA 1998. Page 23