Strange but Blair Witch and Paranormal Activity freaked my wife out, but for me they are two of the least scary horror films around.
The found footage thing just doesn't scare me. For some reason I just can't get into those films and they seem more fake to me than a film presented entirely in the 3rd person.
I think the lack of music plays a huge part of it. When I think about all the films I love they almost all have a very strong soundtrack. I love the synth heavy horror soundtracks of the 70's and 80s. Especially films that use synth sounds when the killer strikes, speaking of which The Burning is on YouTube if anyone wants to watch it.
Undecided what to watch on Halloween...probably The Thing