It's a very psychological game. The kicker at the near-end is not that expected, and the music they play during the part after it (a song called Black Fairy) in the Nightmare Hotel is some of the most disturbing, ambient music i've ever heard. The atmosphere in this track (and the setting in which it's used) work so fuggin' well with eachother it's just...disturbing. It works, really well. It actually sent a chill down my spine. If you wanna hear it, look it up on YouTube.
Anyway.
The game's not HELLA scary, it's just extremely psychological. The best kind of scary. It makes you sympathize with and be a very disturbed person. I'd tell you why he's disturbed, but then that would kill that near-end kicker I mentioned. But it's pretty cool. All the monsters in the game are representations of James' psyche which manifest into physical being while in Silent Hill.
All in all, it's an awesome psychological thrillride.
Kind of like Fahrenheit (Indigo Prophecy).
Which is another game I highly suggest.