Horror games aren't usually the most visually impressive. That's not to say they can't be pretty, but aesthetics aren't as important as atmosphere in horror games, which is why one like Devil Daggers can still be spooky, even if you do have a weapon of sorts - another common no-no in recent horror titles.
In Devil Daggers players are tasked with slaughtering skulls and other floating, pixellated enemies in an arena that doesn't give much room for manoeuvring, all whilst listening to a haunting soundtrack with a claustrophobic, cthulu-mythos-like atmosphere.
The game is single player only and is currently under development by a Steam user called Sorath. It's up on Steam Greenlight and enjoying some early success, so if you like the look of things consider giving it a vote yourself as up and coming developers need as much help as they can get.