Dead Space's method of being scary relied heavily on the "hideous monster pops up out of nowhere" method of being scary. The problem with this is that the gameplay mechanic behind this breaks down right away. The developers overdid the buildups to most of the events by using movie-like techniques such as creepy music/lights suddenly go out/something runs through the air duct overhead. These cues aren't actually bad at all, but they were used so much throughout the game, that by the second such encounter the player knows to just stand in a corner and wait for the huge air duct on the other side of the room to burst open before opening fire. I personally quit playing soon after acquiring the flamethrower, as I had simply gotten bored with the gameplay and had no remaining desire to hear out the plot when I could just go watch "Aliens" again and save myself some time. I don't want to downplay the excellent effects created by the lighting and sound people who made the game, as both of these elements had great potential, but they put so much effort into making a buildup for every little monster popup that they become mundane quickly. Similarly, the enemy designs were certainly grotesque, but that in itself isn't truly scary unless presented properly. I'm going to use "Amnesia: the Dark Descent" as a comparison. In Amnesia, most of the enemies you encounter are hideously disfigured undead with rusty blades where limbs should be or large gaping mouths for faces and hooklike claws, but the main reason the enemies of Amnesia are truly scary is that they seem significantly threatening to the player. In Dead Space, The main character best resembles a humanoid dump truck, whereas the standard enemies that your first encounter look like a pile of mangled organs with with a couple of sharp parts sticking out of a rib cage. While they would be extremely threatening to your character were he one of the average residents of the planet cracker, your character is basically a hired gun in full body armor. The average necromorph's bone blades simply don't look as menacing when you look like you have an exoskeleton. Usually when this is the case in a game or movie, it is offset by numbers, e.g. zombies or the flood in Halo The infected in Dead Space, however, rarely appear in groups of more than 6 or 7, which fails to make the odds seem overwhelming at all. Another reason that the dead space enemies fail to be truly frightening is that you get a clear view of almost everything you encounter, and it falls somewhere between the regions of completely alien, e.g. cthulhu, and disturbingly human, e.g. enemies from a game such as Silent Hill. In Amnesia, however, the majority of enemies look vaguely human at a glance, but are misshapen enough for their silhouette to immediately tell your mind that there is something wrong with what you are seeing. This design is complimented by the fact that you rarely get a good look at the enemies in the game, which allows your mind to fill in the details of their appearance; usually with images that are more personally disturbing to the player than the actual appearance of the creature. Such a tactic is admittedly harder to incorporate into a shooter style game such as Dead Space, and it is certainly possible to make a scary game without hiding the monsters from view, but it can make something truly horrifying if used properly. In fact the scariest part of Amnesia in my opinion was the first area in which the player encounters the invisible water monsters that occupy some of the flooded areas. These enemies are not seen at all, but are indicated by loud footsteps and splashes in the waist deep water as they trudge slowly towards you.
Simply put, Dead Space tries hard to reach the eerie black lagoon of scariness, but overdoes it and falls in the muddy jungle of predictable and repetitive.
Wow, that is a giant block of text. First post, BTW.