Well, it's got its very creepy moments but I don't think that the atmosphere was supposed to be poop your pants scary all of the time. I think it was intended to be a very intense sense of worry and panic about what may be next with a few scary bits sprinkled in for good measure.
Overall, I thought it was one of the more emjoyable titles I played in '03, but the 'chase the girl in the red kimono' part was a bit annoying.
Peace,
Ant