I just bought two copies of Dead Space yesterday. One for myself and one as a Christmas present for my brother.
This is easily one of the creepiest games I've played on my PS3. I think that's largely due to the audio. All the whispering, clanking and rattling pipes just makes the game spooky as f*ck. I'm a few hours in (just past the centrifuge part) and I'm loving every minute. Upgrades to weapons and your suit is also a lovely surprise that I wasn't at all expecting.
There was this one area where I could hear this dull, metallic thud every few seconds. After 4 or 5 minutes of wandering around I turn a corner and there's this kind-of-alive corpse banging its head off of a pipe.
Considering how cheap the game was I'd definitely recommend it to just about anyone. I can't wait to see where the story goes.
Edit: Voodoo, I definitely agree with the part about being vulnerable. I think that's one of the things that makes it so freaky. There's never a safe area to hide out in. I'm pretty sure you can even be attacked when you're upgrading a weapon at a Work Bench.
After the few hours I've spent with the first game I have faith that the sequel will be just a creepy. I'll definitely be on the lookout for Dead Space 2.