I ask myself that question every time I see a "[insert survival horror series]'s New Horrific Transition to the Next-Gen!" The reason I figure we get excited such things is because we expect the same thrills that scared us in the past to reoccur with more realism, more immersion, and most of all, more stained pants. However, despite having a huge technical advantages over their predecessors, such games have yet to have the same effect, leaving gamers disappointed, and me to examine why.
One could start by blaming the overall direction that has been taken by the more famous survival horror series in the past few years. The most famous transition was Resident Evil. Capcom decided to replace the cheesy but suspenseful horror for the past few games and focused on a mainstream action approach. This change began in Resident Evil 4 -- so did the numerous critics complaining that the game "wasn't scary enough". By the time Resident Evil 5 was released, gamers realized that this game was not meant to make us soil ourselves. Although they still retain their zombie-based plot through rail-shooters, the series has still failed to bring us moments like "The First Zombie", "The Dog" and the Nemesis walking through that damn door. And sure, the gameplay for the series has made vast improvements since the days of fixed-camera angles, but was that radical change really worth the novelty fears the original games provided?
A similar, more significant transition for a survival horror series happened to Silent Hill. Given the Japanese series to them by Konami, The Collective, an American developer, compromised the disturbing ambiguity, isolation and symbolism for a more direct, action-oriented game. In an attempt to be more appealing, or dare I say it? Westernized, the game removed everything that made characters like Pyramid Head and zombie nurses so damn scary.
This may be somewhat of a stretch here, but maybe current-gen games aren't that scary because well... we do not get so scared anymore. Being a kid playing Resident Evil was a novelty experience -- having that childish suspension of disbelief made even the most subtle of moments scary. As time and people grow, this novelty wears out. I can't say that the Resident Evil 5 put jeers in me, but seeing the area I grew up in get bombed really brought some nightmares
Maybe this problem is a combination of all problems listed. Although it's coming out on the Wii, maybe Silent Hill: Shattered Memories and Fatal Frame IV (if it's released in the US) will change this pattern. I'm not completely sure, but I do know one thing: my pants are way too clean right now.