My understanding on that Silent Hill arcade game, which was released only in Japan, was that it used environments from Silent Hill 2 and 3. From what I understood, it is old enough to have been made by Team Silent, and it had been hinted it was made partly with their support. So I don't know if it's fair to be mad about that thing.
In any case, the thing about horror is you get used to it. No matter how hard Team Silent tried, they would eventually have failed us (The Room and the political wrangling that messed that game up are a hint at that). Change is good. For my part, I think Origins was one of the scariest of the franchise, and fit in quite well, though I have felt disappointments with Homecoming, like most. Shattered Memories was a good re-imagining and a heavy, emotional game, it's just that the game play sucked.
As to the inevitable fanboi reaction which will claim that only the Japanese, thus, only Team Silent, can imagine the types of psychological horrors that came from those first games, let me say that not only is racist, it's patently wrong. Silent Hill is about as Western as a Japanese game can get, from the influences of, and references to American and British authors and artists in the names of streets in the town, to the Freudian and Jungist concepts in the creatures and other horrors, to the Industrial Rock sound of the music, to the unspoken fact that the whole thing is about as Lovecraftian as a game can get without featuring Cthulhu himself.
I love Silent Hill, and I loved Team Silent, but that they never admitted the Lovecraft influence (cults, tentacled things, crossing inter-dimensional barriers, dream-influenced dimensia, dream horrors come to life, etc. - all American, British, and German concepts, by the way) has always been a crime. The closest they came was naming streets after people who carried on from/corresponded with Lovecraft. But he's there, nonetheless, whether they, themselves know it.
What I'm saying is that Western creators (American, Czech, whatever), are fully capable of imagining the same sorts of things. They just need to find the right team for it.