Amnesia: The Dark Descent

You should check out Eternal Darkness. It's a bit old tho (gamecube). Your character had a fear meter and if it got too high it would start to affect your gameplay. Hallucinations, your controller would map backwards, game volume changes. It was a pretty cool concept

This is one of my favorite games ever.
 
Alright so I started playing Penumbra: Black Plague. Where the FUCK is someone to hide when enemies carry flashlights??? Lol, I'm so pissed, I had to replay that part like 5 times before I got away from Mr. Schlong.