I watched this one not knowing what to expect. I had heard good things and bad things from people who had seen it, and I decided to watch it for myself in order to make my own decision.
The whole movie is filmed in the style of "The Blair Witch Project", where the action is caught on a handheld camera. The movie follows a couple who believe that they are being haunted by some kind of spirit or ghost, so they set up a video camera to catch what's happening. Close to the beginning they consult a psychic, and after his visit the eerie occurences seem to escalate.
Quite simply, this movie scared the heck out of me. In the beginning the eerie occurences are subtle and not that frightening, but it is paving the way for the really scary stuff to happen. Things start to escalate about one third of the way through the movie, and then the scary scenes are in abundance. The night that I first watched this, I couldn't sleep because I couldn't stop picturing all of the scariest parts of the movie.
Do yourself a favour though- skip the alternate ending. The theatrical ending is far better, and ten times scarier.