The Dink Network

After playing Survival Crisis Z, an actually scary game with characters that look like high quality MSPaint creations, I can say that the correct use of sound really is the key to freaking out the player. You can hear groans and high-pitched, burbling laughter in the distance, you know something is close... but you don't know where. And when you hear an air-raid siren while wondering through the city... you know you're just seconds away from hitting a huge wave of biting, clawing, and screaming zombies.

Often, it's the anticipation of danger rather than the actual encounter that's scariest.