I actually thought that the first PA was one of the more well done horror movies that I've seen in years. It is the "low budget feeling" movie that Blair Witch was hyped as being, I would say. Blair Witch attempted to do the "what you don't see is scarier" theme, but they did it outdoors in the woods, which modern audiences don't really identify with (after all, how many of the people who went to see Blair Witch actually know how spooky it feels to be in the woods at night?).
PA being set in a house made it more easy to suspend disbelief, and the use of limited perspective and walking around the corners was incredibly, incredibly clever.