I think the biggest problem with this game is still the monsters. No, you don't have to make your monsters look inhuman for them to be scary, but having them still too similar to ordinary people is going to be a problem in an other worldly setting. You can easily overcome this by making the behavior or the body language off in a really nasty way, but this game didn't do that.
In SH2 where it had monsters that were similar to humans they made the walking simulations for the monsters just a little off and didn't have them behave quite right while they still had a definite purpose. The monsters in Downpour don't feel like they have a purpose (when they're humanized), they have a pattern definitely, but no purpose, no goal like some of the previous monsters. It makes them too normal. Also, this might sound contradictory, but the monsters of Downpour are way too easy to predict. Monsters in previous games had at least a few different ways to respond to the player and sneak up on them, they were still definitely within their behavioral confines, but they didn't just feel like they were kind of harmlessly robotic.
Another way they could have maybe made the monsters scarier is just do what they did with scariest monsters in the past games, take away their face. If you have a creature that is mostly human but you obscure its face it becomes scarier, because a lot of the feelings we read on other people (if we've not lost our eye sight) come from judging their facial expressions. If you can't see that you took a lot of knowledge away from the player and being without it usually scares people.
There's a greater problem with the monsters in that a good portion of them don't relate to Murhpy's psychology (though not all thankfully, which does make it better than Homecoming which had a higher ratio of monsters not related to the main character's personal problems). If the monsters had related back to him more without him having to almost directly tell us what the problem was they could have been far more interesting and scary. But, as Yahtzee pointed out, that is problematic to work with because Murphy's past basically changes with each ending. One solid past would have been good for this.
If the monsters alone were improved I think I could have forgiven most everything else in the game, like the exploration being less interesting than it was in other games that allowed for it, the NPCs being too there so you didn't feel entirely alone while not getting to know them at all (previous NPCs made you feel more isolated by being creepy, more distant, or judgmental/against you), or the terrible controls and item direction. As it is the only thing that really works, with it being a Silent Hill game, are the other world environments. They also could have used more work, but they were at least interesting and occasionally threatening.
That's not to say this is the worst game ever (or all that close), but considering what type of game this is supposed to be and what series it's supposed to be in it needs a lot more work.