Gahd damn, this made my day. Del Toro would likely be a better fit for Castlevania, but who knows? Can't be worse than Homecoming or Downpour.
For people complaining about the demo, keep in mind it's a teaser. There's a disclaimer at the end saying as much; it's not actually a demo for the final game as much as "Hey, look what the Fox Engine can do for indoor spooky stuff."
Which is quite a lot. The lighting looks fantastic, especially looking around with the flashlight. And there was a special kind of fucked up that 1st person achieved in SH4, so I'm kind of glad to see it return. Provided this doesn't end up being yet another Outlast or Amnesia clone, which would suck.
And this begs the question of how the final game will play. I highly doubt a 1:1 copy of the old games with shiny new graphics would work very well in this day and age, and people would probably be upset at a Shattered Memories esque removal of all confrontation. But Silent Hill to me has always been one of those games-as-an-experience, unlike, say, a Resident Evil, which is horror themed but ultimately a well crafted action game.
Whatever else they do with it, my main hopes are the return of Masahiro Ito for monsters (or at least monster supervision) and Akira Yamaoka for music. I'm really curious about more details, like the extent of Guillermo del Toro's and Kojima's involvement. These international projects are always interesting.
(Also, the voice over at the end of the teaser takes on a hilarious meaning if you interpret the speaker as Silent Hill as a series, and his "father" as Konami.)