I personally don't like it. It looks cool but I mean it's obvious that it's contact lenses. Even laymen would know that, but with the right patter I'm sure it could slay audiences.
Every laymen knows it's contact lenses but with a good presentation it would slay an audience? Seems your second statement contradicts your first.
I have no doubt this could really spook someone out if used correctly. I think most performers, though, would not be able to control themselves from overusing it and drawing direct attention to it. If used briefly and indirectly to accent a mind reading effect without ever saying anything about it but just allowing the audience to see it happen for a brief moment once it would really spook people. Make it more of a "Did I just see that?" moment for the audience than a, "Now, everyone don't take your eyes off mine as I magically change the color" moment. In my opinion, the more subtle, brief, and indirect you make it, the better it's going to be for this effect.
Also, not sure why alex2011 says it could be harmful to your eyes. Perhaps he's never heard of contact lenses? And I really doubt "EVERY laymen knows about this effect already" as petecardmagic21 said. I'd be willing to bet a large sum of money more laymen know about a DL than they do about biokinesis.