I don't thing you really needed todays graphics capabilities to scare people, I remember laughing at mates playing 3D DEATHCHASE on the humble Spectrum. Watching them jerking from side to side to avoid the trees, as if they were real. Unknowingly doing the same myself!!!
Or, ducking down when they hit a 6 on a cricket game, when the ball came towards the screen. However playing DOOM on PSX with a very atmospheric soundtrack was a bit chilling and playing HALO when the 'invisible' covenant would appear in front of you caused quite a bit of 'clenching'.