There's a lot of things that Dead Space get right as a survival horror, from the isolated atmosphere to the fantastic sound design.
Two aspects of horror that Dead Space certainly nails for me is the fear of the unknown and the jump scares, the game manages to do a good job of combining the two without falling into the predictable 'closet monster' territory.
No more is this evident when you come across one of the various tortured souls. They are totally harmless but absolutely add another layer of creepiness and the occasional jump. Especially the ones that were stuck to the walls like in the above image. These grotesque things reminded me of both Hellraiser and Event Horizon which were no doubt heavy influences for Dead Space.