Silent Hill 3.5

[Psyx]

HoH is good for 3.5. But 3.5 is a weak system for this. Had you considered... World of Darkness? It's obvious, but does the job well. Although I'm not sure that it has actual fear rules.

The real key to a good horror game though is having a fantastic GM who understands the genre, storytelling and scene-setting.

And you need players who pay attention.

And a darkened room, lit with a couple of candles...

Or even just a basic horror adventure in Dark Ages Scandinavia set in the dead of winter...

Beowulf and Grendel can easily become that if 'told' in the right manner.