Saw the first one, with the original not-Spielberg ending, and I have to say it was quite good. It was subtle, didn't show, left things open to imagination. That scares me, alright. Much better than showing monsters. If you have imagination, Paranormal Activity does a great job making your own fears and monsters fill up the empty spaces, what it does not show. In that regard, a lot of horror films should learn from it.
Not the alpha and omega of terror, but certainly way above most stuff being done in the genre.