7 Paranormal Activity 
Reportedly made for $11,000, this film delivers million dollar scares and is spectacularly memorable for its lack of special effects. The plot [and suspense] centers around a haunting that escalates in malevolent intensity while the couple being menaced record their experiences on film. Exponentially better than its first person format predecessor, The Blair Witch Project, this movie will have even the most seasoned horror aficionados pulling the covers over their heads when things go bump in the night.
On a personal note, having seen all four of the films in this series, I'd say that PA1 and PA3 rate as being much scarier than the second and fourth installments.