I'm in with the people who say design trumps all. What this episode seems to forget is that at the time, RE2, Silent Hill 2 etc, had great graphics. However, because the graphical content had limits, atmosphere and design were able to shoulder a great deal of the weight-which they ought to do anyway. (Which is sorta said but because it isn't explicit, there's a sense of 'when I was a kid things were terrifying, not like now you fancy bastards!')
Dead Space 2 seemed to recall this when they had the player going back onto the Ishumura (spelling!) to do something. Hardly anything jumped out at me but-and this is especially because I'd played DS1-the whole thing was creepy as hell, because of the atmosphere of the place and how starkly different it was from the rest of the game.
You just can't make an entire game from that material, and charge $60 for it.
I blame RE4 for this, just a little. Don't get me wrong, I love Resident Evil 4; it's an amazing game that breathed new life into the series. But action-horror is very different than horror. If the player always has more than enough resources to deal with the situation at hand, the scare value drops considerably. Again, Dead Space seems to remember some of this but still wants to rely on swarming effects, so for playability's sake, proper amounts of ammo have to be provided. And since RE4 was so successful and rightly so, the people wanting to follow in those footsteps have been legion.