The A tier fear games:
System Shock 2: excellent use of sound, horrific looking enemies and lots of psychologically draining elements (people who have killed themselves, random respawns, weapons that can fail) all combine to make a game that can leave players a nervous wreck.
Alien vs Predator (and sequel) (marine campaign): narrow corridors with poor lighting, extremely fast and lethal enemies and the almost constant blip of the motion tracker, letting you know you're being hunted. Facehuggers kill instantly if they get hold of you.
Silent Hill (PSone): excellent use of sound, limited resources, plenty of darkness so you can only see a few feet ahead and rely mostly on audio to know when enemies are nearby, and a lot of very disturbing images and sounds. A powerful sense of vulnerability.
Penumbra (and sequel): a powerful sense of vulnerability as you have no (real) weapons and there's very limited lighting in the game so you can often only see a few feet ahead of you. Plenty of tension building moments as the game assaults you with audio clues, toying with your anxiety levels, then finally throws an enemy at you, then it all starts again.
The B tier fear games:
Doom 3: pretty weak horror, mostly based around a see-or-shoot mechanic, so you always have one clear vulnerability. While this mechanic itself isn't a bad one, it's poorly used, especially as Doom 3 is more of an action horror game. Largely based around (predictable) shocks rather than fear.
F.E.A.R: similar to Doom 3 (minus the see or shoot mechanic). Relies on largely predictable shocks from Alma, a clearly benign (as far as you are concerned) force. The game does have excellent use of audio and you'll often be jerking and starting as you hear something behind you, only to turn and see that it was just a bag or a phone you brushed up against.
Other:
There is a type of game that, while it does not fall under the banner of conventional terms like scary or horror, is nevertheless a frighteing game. Games where you can die instantly - games like Rogue Spear (and other early Rainbow games), Operation Flashpoint and S.T.A.L.K.E.R (mostly early on), and perhaps even the early Tomb Raider games. Fear is ultimately a result of our sense of self-preservation, and nothing sparks that sense like the realisation that we could die in a heartbeat.
When playing these games, the player will either fear for his life and find the experience harrowing, or adopt a soldierly pragmatism and not find them frightening at all. Personally, I'm a coward so they scare me.
I guess just to round out my list, I should mention Clive Barker's Undying. I only played a demo and found it more annoying than frightening, but it seems very well respected amongst fans of horror games.
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