Do I want American Nightmare? Is there greater emphasis on combat and if so, is it improved?
Assuming it's discounted to a few bucks again*, I say yes. Combat is improved insofar that there are a wider assortment of weapons and enemy encounters offer slightly more difficulty in that some of the enemies aren't as simple as "shine the flashlight and shoot" (one particular type devolves into a smaller group of enemies when coming into contact with light, for instance). The story, while its premise is mildly interesting, falls flat considering the creative scope and does nothing to move the overarching narrative forward. Similarly, the game itself was clearly limited by the file size limitation imposed by XBLA, with the texture quality ranging from decent to awful, and, more importantly, the campaign consisting of three small locales that are repeated thrice.
Really, it boils down to:
Did you particularly enjoy Alan Wake?
If "Yes": Buy American Nightmare
If "No": Skip
Edit: * I derped and thought the game was part of the Community's Choice poll, haha.