REC is quite simply one of the best modern horror films of the last 20 years. The cinema verite docu-horror style has been done to death in unsuccessful ways (Diary of the Dead are Cloverfield are particularly weak attempts) but REC single-handedly renews faith in the effectiveness of this style.
Of note is the wonderfully intense performance by Manuela Velasco who plays Angela Vidal, the main character. She is amazingly natural and her performance elicits real tension in the viewer. Perhaps the greatest thing about REC is that it's actually frightening. Imagine that - a horror movie these days that is actually scary! I've watched REC several times and its effect has not dulled, even after seeing the ridiculous US remake, Quarantine. The REC/Quarantine comparison is exemplary of how even a shot-for-shot remake can ruin a concept when there is a lack of talent involved.
Buy this movie - it is a modern horror masterpiece.