Damn right, I would. And I suppose I can, technically. The thing that Cry of Fear (set in fictional Stockholm, scarier than it sounds) got right was the atmosphere. It just felt... Spot on. A cold, dark autumn night, when there is no one but you outside, and everything is too quiet.
But really, a horrorgame set in Gothenburg and concerning Innsmouth-y elements would be fantastic. In fact, here's an idea; the sea Draugr of old have had enough, and unleash a thick, mysterious fog on the city, invading the surface realm by the cover of the mist. With them comes horrible creatures from the depth, and it is clear this is only the beginning. You want out, but are forced by circumstance to head deeper into the mist and set things right. There, devs. Make it happen.
Or; after a freak storm, a rusted ghost hulk of a ship silently drifts into the harbour. The police and the port authorities send some people aboard to investigate. Then, everything goes wrong.
Even more or; the old mayor's residence got a reputation of being quite severely haunted. A group of scientists from the university heads out armed with experimental technology. It fails, and they punch a hole through overlapping realities, allowing all sorts of interdimensional horror to pass through. Guess who gets to fight their way back in and fix it?
Hmm, this was a fun exorcise! I really ought to get a Source mod on the subject together sometime.