Okay. Literature dork time.
In terms of the whole "is this game actually scary?" debate, it might be useful to think of the long-running distinction between "terror" and "horror" in horror fiction. Most folks who are saying Alan Wake isn't scary are referring to what Radcliffe and King call the experience of "horror" rather than what they call "terror." But both privilege "terror" over "horror" in what's called generally "horror fiction."
Ann Radcliffe on the distinction:
"Terror and Horror are so far opposite that the first expands the soul, and awakens the faculties to a high degree of life; the other contracts, freezes and nearly annihilates them. I apprehend, that neither Shakespeare nor Milton by their fictions, nor Mr. Burke by his reasoning, anywhere looked to positive horror as a source of the sublime, though they all agree that terror is a very high one; and where lies the great difference between horror and terror, but in uncertainty and obscurity, that accompany the first, respecting the dreaded evil?"
Stephen King on the distinction:
"[In terror] the imagination alone is stimulated, [while in horror] the viscera are also engaged." And according to King's grand schema of horror fiction, "terror [is] on top, horror below it, and lowest of all, the gag-reflex of revulsion."
So basically, "terror" is all about suspense, anticipation, and your imagination running wild. And "horror" is all about being physically startled by finally seeing the monster. IMO Alan Wake favors "terror" much more over "horror," especially in the first 2/3s of the game.
