In my opinion, it's not that RE4 lost the survival horror aspect because they made the gameplay fun. They lost it because they added unlimited & frequent saves and unlimited/unrestricted do-overs for every room you entered. When you know you if you die you can simply restart from a minute ago with no penalty, it kind of kills the 'survivor' part. And when some rooms are so tough that you are going to die a dozen times before you get it right, there goes all the 'suspense'. Scarcity of supplies is of course also very important.
Of course the best recent example of a game that shows the value of creating suspense through punishing you from dieing is Demon's Soul. For a survivor horror game, it really needs to be balanced right. You need to hang the inconvenience of dieing over the players head, but balance the difficulty so it's not punishing to the point of being frustrating. For the difficulty balance of the classic RE games, a skilled player should be able to just barely squeeze by through the game without dieing (minus maybe a boss fight or two). This gives you the sense that you 'survived' the game. You can't really call it survival if you needed like a hundred lives to beat the game, like I probably did with RE4. It was still a very fun game, but I wish there was more moments like going through the sewers, the hedge maze, or the creepy lab, rather than the constant shootouts. Regardless of good/poor gameplay mechanics those parts felt like the classic RE formula.
