Bottom line - this game is freakin' scary! Above all else, Monolith Productions (of AVP2 and F.E.A.R. fame, they are good at scaring me) nailed the atmosphere. Excellent surround sound was constantly making me check my back and flanks as I moved through eerie levels. Bad guys are thoroughly repulsive and in-your-face. The levels are dark, but not Doom 3 dark and you have an unlimited flashlight. They did such a good job making the game frightening... that I sent it back after 2 hours of play. I could NOT handle the black sac children hanging from the basement ceiling, waiting to grab your face and scream as you walk beneath.
Having only played the demo of the first game, I don't know how supernatural it got by the end. I can tell that the main character did go through some crazy events and the story jumps right back into it. I liked how the supernatural elements were included in the presentation. Example: to get your next objective, you're forced to look up close at an old TV and move the antenna around until you get a signal. A signal of a creepy Saw-movie-influenced character doing bizarre stuff.
The melee combat was still as solid as I remember from the Condemned 1 demo. You can pick up and swing blunt objects like pipes, 2x4's, and prosthetic arms (lol). Enemies are really good at weaving in and out of range, running away at low health, and ganging up on you from multiple angles. Would anyone else second me if I called the Condemned series a fine evolution of the classic beat 'em up?
If your taste in games goes anywhere near brawlers, supernatural stories, or hide-under-the-couch scary, I recommend you take a look at the Condemned series. A big plus if you have a quality A/V setup.
P.S. There was another big factor that influenced sending the game back on day one. It was the day before I was going on vacation for three weeks and I really wanted to have Mirror's Edge waiting for me when I got home!