The Blair Witch Project wasn't
that bad. If you saw it in theaters before all the hype it was a decent faux-umentary. I think Paranormal Activity has way more potential because I believe it is set in a suburb house. It will probably have parallels to a documentary-esque Poltergeist. And Poltergeist scared the crap out of me the first time I saw it. You want to talk about genuinely scary horror, watch Poltergeist. That movie is just scary as hell because it is set in a suburban home and involves your everyday, normal American family.
Which reminds me....BaB should see if there are any links for Poltergeist. With a tagline, "They're here!" you cannot go wrong with this Spielberg piece of genius.