To the point: Dead Space was not really scary for me. A few monster appearances were surprising (which applies to firecrackers people suddenly use a week after Sylvester, too), most monster designs were gross, but nothing was honestly scary. Why? Because it was too easy. Let me tell you why before you simply recommend a higher difficulty level that changes some numbers around:
Granted, not so genre-savvy players may have been scared by monsters in the early levels playing dead, but once they learned about it, even they should have checked every corpse they didn't kill or watch out for drops after they killed.
You always know how to deal with zombies because the solution to killing them quickly is pounded into your head so early and so throughout that there is no way you could overhear it. No matter how gross the monster you encounter, it'll either display its limbs like an attention whore or it will have suspicious yellow glowing blobs you can attack (I'm looking at you, boss monsters).
Even the story behind Isaac's wife was one big You Should Know This Already
. Early in the game the player is already being told that people on the ship start hallucinating and seeing ghosts and the like and seeing as everyone you encounter on the ship is already dead or is dying (with the exceptions of Mercer and Kyne), there's no reason to believe your wife is still alive. When you meet her for the first time "in person", some suspicion appears because ghosts and hallucinations shouldn't be able to type on consoles, but the game makes sure to drop more hints and teleport her around so it's pretty clear again she's a ghost.
Of course, like Yahtzee pointed out, it's pretty damn hard to care at all about the protagonist's life at all because of the horrible characterization.
The Hunter was supposed to change that "I know what to do" attitude because it's "invincible", but cutting off the legs makes him crawl pathetically and solves that problem, too. Even when the player is supposed to feel cornered the game just drops Stasis packs en masse and you can take your time.
The sudden dramatic music also makes sure you never ever overlook a stalking enemy.
All together, Dead Space was gross, but in the end just one flashy soulless firecracker - not scary.
P.S.: "Make us whole again" were the most annoying arc words I've ever heard.