Have fun with the controls in System Shock... mouselook is overrated anyway, right? Great game though. SHODAN is an amazing character.
And if we're talking about good horror games, I have to put in a mention of the Penumbra series. The developer, Frictional Games, is a little indie company, so it isn't the high-budget production you get with Dead Space and such... but they have a better understanding of the horror genre than any big developer. Penumbra shows just how viable and awesome the horror genre is, and puts in a good word for the adventure genre while its at it.
The best way I can explain Penumbra... I was about 6-years-old when I played the original Myst, and I got the sequel, Riven, when it came out a few years later. I love the series to death, but I can never recapture the feelings I had when I first played those games. I was younger, less aware of what games were capable of doing, and perhaps less jaded by modern graphics. Playing Myst, I constantly had the feeling that someone or something was standing right behind me, looking over my shoulder. I was in this very believable world, and I had no idea what to expect from it. Of course, there isn't anything behind you in Myst. Black-screen trap books aside, there is no way to "die" in Myst.
Penumbra gives that same feeling, as you carefully sneak through the world, praying that nothing hears you. You get that same feeling that something is lurking out there, ready to kill you in the blink of an eye, and you haven't even seen it yet. But unlike in Myst, you're right. And it will.