One horror video game for the PS2 that freaked me the hell out is Fatal Frame. You play the game as Miku and you have to run around an old abandoned mansion, uncovering the story behind the mysterious disappearance of your brother and find out why the place is so freakin' haunted. The mansion is infested with ghosts that want to suck your life energy. Your only weapon is a camera that can capture these restless spirits. This is one of those games you have to play at night with the lights off. And you should probably wear a diaper too. It is scary pee pee leaky scary! Fatal Frame has a great story too and despite being frustrating as hell in parts (I didn't beat it before I had to get it back to Blockbuster), I had a great time with it.
And the sequel is just as good. Alas, I never got around to playing the third part myself.
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