this is the reason you should buy the special version for the original Xbox insted(from the ign review):
I love the First-Person mode, because it not only solves control issues, but it works perfectly for Fatal Frame II. This is a horror game, one that needs you fully involved, to be completely wrapped up in game, so that it can then scare your boxers off. If there is a Fatal Frame III -- and I'm pretty certain there will be -- first-person should be the only option. You really get a great sense of perspective and because your field of vision is more limited, it's a lot easier to get surprised by the sudden appearance of a ghost
I have no doubt that the first-person view works well, and if it solves control issues that are present otherwise then that could be a big deal. But I'm not sure that I buy this argument.
Ultimately, getting caught up in the scary experience relies more on story than viewpoint. Take scary movies as an example: I don't need a first person view to make something scary - in fact, there aren't many examples that spring to mind where a first-person viewpoint is (a) an improvement, or (b) more than a limited gimmick*.
There have been a spate of first-person horror movies recently, yet I haven't seen one that I particularly enjoyed or care about enough to re-watch. Maybe it's not fair to let that experience throw me off wanting to play a horror game from a first-person view - games and movies are significantly different, after all. I just can't shake the feeling that moving to first-person is a lazy way to try and avoid fixing what's really lacking though (controls in this case, often special effects budgets when talking about movies) and that improving the story is almost always a better solution to making players feel more engrossed by the experience.
*Not saying it's necessarily a bad gimmick. It can work extremely well in some cases... Halloween comes to mind. But generally that's not how I like to experience my horror.