Eternal Darkness is indeed a great game, and personally I would say it's better than Resident Evil, both in terms of gameplay and 'scare' factor.
Resident Evil has lost it's edge, it's the same trick everytime. Oh dear, I'm walking past a window, nothing happened, walk past it again, oh no, I've soiled myself because a zombie crashed through it.... How original.
Eternal Darkness is unique, due to the insanity effects, although not scary, add even more tension to the atmosphere. I'd love to see a sequel, as in a 'Final Fantasy' type sequel where the entire story, setting and characters have changed.
But I tell you, if you've got access to a PS2, go give a game called 'Fatal Frame' (Project Zero in Europe) a whirl.
Best. Horror. Game. Ever.
This one had me actually fearing to continue on...