I completely agree about the clunky control thing. I hate when a game uses that for cheap scares. I should be afraid because of the danger, not because I'm uncertain if my character will turn in the right direction. For me, a good horror game is all about atmosphere. It's the thing I remember most when looking back on them. When I think of Eternal Darkness, I always remember the church level with brother Francis (I think that was his name). I referred that chapter "monk with a mace". Between the old style cathedral, the rain outside, and the spooky coverup, it stuck with me for years to come. I even wrote a book that was inspired by that game.
I also remember Resident Evil 4 fondly for its dirty, middle of nowhere town. That sequence where you and two other characters try to barricade yourselves into a house is instantly horrifying and memorable. Not to mention a head shot in that game made things worse!
And the last horror game I played with a strong atmosphere was Alan Wake. From the first moments of that game I felt like I was in that tiny lakeside town. Walking into a shadow always got my pulse going.