1. Why Dead Space is not scary
In this Gamasutra article, Dead Space and several other supposedly scary games are pitted against each other in a scientific study. I cannot say anything about the other games since I have not (yet) played them, but Dead Space is not particularly scary. It was this disappointment that made me stop playing the game last time. Based on my prior observations of horror games, I'll point out the problems.
Dead Space falls into the same pitfall that undermines a lot of suspense from the Silent Hill series: there are lots of enemies. Killable enemies at that. This is a huge problem, because it has been acknowledged time and again that once the threat can be dealt with, it becomes a lot less scary. Enemies in Dead Space do take some skill to defeat effectively but typically they are gone in seconds. Dead Space also does not do a whole lot foreshadowing. Mostly, enemies just appear from somewhere, sometimes trying to get that cheap surprise scare.
While the game is very grotesque, it rarely got me particularly disturbed. By fluff the necromorphs have been human, but when you encounter them in the game, they are so far removed from traces of humanity that the deformation effect does not kick in. They don't look like horribly mutated humans, they just look like monsters. The ghosts in Project Zero (Fatal Frame) are actually more effective in evoking this effect, and they are not even physical beings.
Finally, Dead Space by design cannot evoke the scarce resource effect. Fighting enemies is a core mechanic in the game, and therefore there was no way for the designers to limit the resources available to the player so that ammunition would be actually scarce. Okay, sure, I'm a gaming veteran and I can get a decent hit ratio, so maybe less skilled players will have to deal with scarce ammunition and occasionally take out monsters in melee. However, I remember how things were in System Shock 2 where ammunition to weapons really was scarce. The reason why I think the scarcity effect does incur fear is that although you might have the tools to deal with enemies now, what if they come in such numbers that you don't have enough.
I'm not denying the atmosphere of Dead Space. It was fairly strong. The game just was not scary.
2. Ammunition, Dead Space style
I do now know how popular this mechanic is, but this is my first time encountering it. In short, there are next to none pre-determined drops / crates / items laying on the ground in Dead Space. Instead, the player will always randomly get ammunition for one of the weapons they have equipped or some utility item. On paper this might sound pretty good: players get to use the weapons they like. On the flipside, players are never forced to fight with suboptimal weaponry. I remember how in System Shock 2, availability of ammo played a big part on which weapons to use.
This mechanic might sit better with some games, but I didn't particularly enjoy it in Dead Space. It gives little incentive to make use of all of the weapons and the randomness feels a little bit cheap. It also allows gaming the system by having less weapons equipped. Having enemies drop items consistently also has a side effect: the player can be sure that an enemy is dead when they see the drop. Since some enemies in Dead Space in fact do feign death, this kind of ruins the surprise.
3. Don't aim for the head
Dead Space challenges the headshot trope of shooters. Although cynically speaking it's just replaced with limbshot, the mechanic does in fact serve the game well. Tearing enemies down limb by limb is the name of the game. I liked to start with legs. The point of this mechanic is that damage has a big impact on how the enemies perform. Especially shooting their legs off. It definitely adds to the grotesque feel of the game. After a lengthy battle, the place is littered with severed limbs and limbless torsos.
The mechanic alone would not be as effective without weapons that fully support it. The very first two weapons in the game are best examples. The plasma cutter is a precision tool that can make horizontal or vertical cuts making it far more interesting than your usual pistol (although it is in fact pretty much just a pistol). My favorite weapon in the game, the line gun, fires a wide cutting line which can easily sever both legs off of multiple enemies at once. Oh and there's ripper, an industrial remote-controlled saw blade, which is an excellent tool for close quarters combat.
The limb shooting mechanic and brutal weapons combined make defeating each enemy a highly satisfying experience of mastery. I enjoyed shooting monsters in Dead Space a lot more than in many games I've played previously.
4. The cool UI
Dead Space is highly successful in integrating everything into the game world. The sci-fi theme affords this without suspension of disbelief, and I liked the floating menus etc. as soon as I saw them. Ditto for the guidance system. The simple but clever trick employed in the game is to display every GUI thingy as a holographic projection in the game world. That's all, and it works like a charm.
I do believe that in games that put a lot of emphasis on atmosphere, UI designers should strive to make the HUD go away entirely, and in Dead Space the designers have succeeded without taking any information away from the player. Overall, the designers of the game have done a fairly good job of minimizing the suspension of disbelief.
Dead Space is a good shooter. Its action is satisfying visually and mechanically. The designers have put several solid innovations into the game and made it highly enjoyable. They have done a good job with minimizing the suspension of disbelief. They only falter with the weird resource system. However, Dead Space is not very scary, suffering from the common problems of horror games where a lot of monsters are fought.