Most "these are real people having real things happen to them" movies tend to have a short shelf life. I watched The Blair Witch Project for the first time, recently, and found it a laughable tale of a bunch of morons doing stupid stuff and getting themselves in trouble that they deserved. Even beyond the marketing hype having a short shelf-life, these movies are generally best viewed in theatres, since it's dark, and it's easier to buy in to these things when it's a whole group reinforcing each other. I just picked up Paranormal Activity for cheap from the local rental shop, since for the price of buying it, I could have had it for 3 days. Wow. This movie.
This... this is a horror movie. That's all there is to it. This movie, even watching it at home, with some lights on, surfing the internet, even with all that, still managed to unnerve me, and make me legitimately worried for what would happen next. There's two characters, really, and one is likeable, the other is a bit of an ass, but in a realistic way. The story actually works really well with such a limited cast, too. The likeable character draws you in, and gives you someone to worry about, and the one who's a bit of an ass, when he starts to take everything seriously, the audiences knows that yeah, the situation is starting to circle the drain.
Paranormal Activity is all about the slow burn. It starts slow. It stays slow. But during all that slow, it builds. Every incident adds. Every little escalation shows that it's not imagination, there really is something going on. There's absolutely no question about whether they're imagining it, or it's a prank, or anything like that. There is something out to get them, and it is not friendly.
I've not seen the alternate ending, yet, but as for the regular ending, I wish the movie had ended about a half-second earlier. It was probably one of the scariest things I've seen on film in a long time, except for the make-up job in that last half-second. I actually had the same problem with Wes Craven's New Nightmare. That movie creeped the living crap out of me for the majority of the movie, and I'd started having concerns about sleeping that night, up until the last special effects shot of Freddy being burned. It was simply so ridiculous and out of place that it pretty much destroyed the rest of the movie. The last half-second of Paranormal Activity isn't quite that bad, but it is very, very close.
Movies like this usually lose a lot of effectiveness in the transition to the small screen, but if you're looking for a scary movie this October, I cannot recommend this one enough. It really handles the trip well. Now, don't mind me, I'll be sleeping with the lights on, tonight. Not that it helped them...