A great example of a game that did scary right was Fatal Frame. You enter a room and the music gives you the impression that something is not right. The rooms are always not well lit and the music dials up the tension. Then you bring your camera up and look through the viewfinder(which is the only way of seeing and combating the baddies)only to not find anything in the room. That's right some times the music just dials the tension up a bit for no reason. Then you walk into the next room and raise the camera peer through the viewfinder only to see a ghoul one foot in front of you face about to do terrible things to you.
Play this game at night when you are alone in your house with the lights off and no other music or background noise and I bet you turn it off before you finish it. That game was frightening.
