that is true, and also i wish it isn't true =/ it made every other horror game looks like a joke.

This is exactly why Dead Space was not at all scary for me. Even the jump out scares (I would never describe blaring the sound track and having something move fast across the screen as truly frightening) were bland. 

The whole problem of Dead Space and games like it is you are far far too strong for the monsters to pose a threat. You have a full suit of armor, modules like stasis which render enemies useless, telekenetic power module, and 4 guns at the ready to slice and dice them. (will I blow off all of their limbs with the line gun or should i just torch them with the flamethrower?) Honestly, the necromorphs are probably more afraid of Isaac then you are of them, and they attack out of instinct / being manipulated. 

What EA did with Dead Space was take the "survival" out of horror to just make an action/horror hybrid just like Capcom did with RE5. 

Condemned:Criminal origins is probably one of the only effective survival horror games this generation. Creepy atmosphere, enemies that are actually a threat (at least before you get tazer), and a disturbing and intriguing story (at least before condemend 2). Siren is an honorable mention, but the frustration that game invokes over controls and graphical style, at least for me, was too much. 

In retrospect, we really got spoiled last gen with great horror games (silent hill series, fatal frame, echo night, eternal darkness, and a bunch of others).

imo its gotta be siren: blood curse, dead space has some scares but nothing like the feeling of siren

http://www.youtube.com/watch?v=C5ygddCgFPg

THIS.

the general atmosphere was reaaly eerie and some of the ghosts were absolutely CREEPY (the "kakurembo kids", or "the bride" for example). but the most scariest moment ever was when i encountered those ghost hands that came out of mirrors, the first time i almost screamed.

fragile apart, i'd say dead space extraction, some sequences, especially the more hallucinated ones, were really scary

Deadly premonition :D

Probably Silent Hill: Shattered Memories for me. Being defenseless and on the run through a nightmare kicks ass.