A friend and I just left the theater after seeing Paranormal Activity. To give you an idea of how scary that movie is, there were some women behind us praying and cursing. In Spanish. This only added to our tension, and enjoyment. If you liked the Blair Witch Project, and were scared by it, then this movie is for you.
Personally, I would have gone with kosher salt instead of talcum powder, but then I've probably got more experience with demons than the character in the movie. Either way, there were plenty of moments where I would have needed some new shorts if this stuff had been happening to me.