I've never played MadWorld, but violence is violence- some is more extreme, but even cartoons can inspire kids to hurt each other.
Example- I watched the last Matrix movie with my cousin, who was around 14 at the time- after the movie he was running around and doing karate-style moves, and even almost hit a few random strangers.
Was the Matrix more violent than Mortal Kombat? Not really, but it had a lot of action sequences that got him pumped up.
So it really depends on the kid, not the source material. If you know how your kids act, you should be able to determine what is good for them to play- you will see when your child is 5 how he acts, if he is easily excited from action on the TV, then a game like MadWorld is probably not right for him.