Horror is hard to nail down properly, I think setting up a proper atmosphere for yourself is key. Dark room, light incense, etc. just getting yourself in the mood makes a huge difference. I enjoyed Doom 3 way more after I started to flip the lights off.
Don't know about you guys, but the original Haunted House on the Atari 2600 was indeed a scary experience for me. More of the shock factor variety, but it definitely startled you on the higher difficulty levels...
How about amnesia and cry of fear? I remember that i've played horror games at daylight when i was a kid, i didn´t have balls to play at night
I played through shadowman the other day and that scared the hell out of me a lot of the time, the asylum playrooms just the background sounds on that level were enough to give nightmares on their own
TO BEST EXPERIENCE MANHUNT YOU SHOULD... TURN OFF THE LIGHTS... CLOSE THE DRAPES... LOCK THE DOOR... THEN GET READY TO KILL! (From the Manhunt Manual)
I've had more or less the same opinion about horror games. I had played some Resident Evil 2 and CV, stuff like that and nothing really stood out as particularly scary. Dead Space is like that : good sets but a complete disregard for atmosphere, and the way it's put together has no actual finesse or talent for setting. It "doesn't take it's time" if you will... However, I've been playing Clock Tower, the original SNES one (the translation that's available, so on an emulator on my GP2X to be precise) and I found it to be extremely effective, especially in the dark with headphones at night. Some random occurring events can scare the crap out of you. Something as simple as two glowing white eyes staring at you through a window (two white pixels against a black background really) is really unsettling when you're in the mood.
One of the few horror games I enjoyed recently is Cursed Mountain. It's a bit similar to Project Zero/Fatal Frame, but more my cup of tea.
Resident Evil on the PSX scared the crap outta me when i was younger. The first Penumbra game (Overture i think it's called) was very scary. I knew nothing about the game, or what to expect, i felt tense all the way through!
Hope I can play those games "properly" then. I'll buy a sony 7.1 Headset and revisit some low-poly horror classics.
If you want to play the original Resident Evil, you should try the Gamecube remake. It's better in pretty much every way.