The reason it's so belated is that this game is impossible to find in Australia, so I had to order it in from the UK. Nevertheless, here are my spoiler-filled thoughts on the game so if you haven't played it consider yourself warned: I will put a warning when I get into the events of the game's storyline.
    
The brilliance of  Shattered Memories is that it incorporates into the gameplay one of the underlying influences of the Silent Hill series, namely its debt to psychoanalysis. As the player character, one is psychoanalysed throughout the game: it monitors the player's responses to questions given by the psychologist and interactions with the world during gameplay. Based on how the game 'perceives' the players psychological inclination, it alters the environment, monster designs, and characters accordingly.  For instance, a psychologist asks the player probing questions concerning one's atitutdes towards family, sexuality, alcohol use, and sociability. I've not seen such a direct incorporation of the player's self into a game since Psycho Mantis in Metal Gear Solid, which is a shallow gimmick compared to how it's used here.
 
 It also appropriates another core aspect of the Silent Hill series, ontological confusion or the inability to separate psychological from physical reality, to structure its narrative. In this respect they remind me of David Lynch's films, especially Lost Highway.  However, instead of hellish, grimy, industrial settings, Harry Mason is placed in an eerily frozen world inhabited by "monsters from the id." These sequences are effective emotionally and tonally, creating a sense of fear and helplessness as the player can do nothing to combat them.                            (>>>>>SPOILERS, do not read on if you have not played the game<<<<).         
 

The reason it's so belated is that this game is impossible to find in Australia, so I had to order it in from the UK. Nevertheless, here are my spoiler-filled thoughts on the game so if you haven't played it consider yourself warned: I will put a warning when I get into the events of the game's storyline.
    
The brilliance of  Shattered Memories is that it incorporates into the gameplay one of the underlying influences of the Silent Hill series, namely its debt to psychoanalysis. As the player character, one is psychoanalysed throughout the game: it monitors the player's responses to questions given by the psychologist and interactions with the world during gameplay. Based on how the game 'perceives' the players psychological inclination, it alters the environment, monster designs, and characters accordingly.  For instance, a psychologist asks the player probing questions concerning one's atitutdes towards family, sexuality, alcohol use, and sociability. I've not seen such a direct incorporation of the player's self into a game since Psycho Mantis in Metal Gear Solid, which is a shallow gimmick compared to how it's used here.
 
 It also appropriates another core aspect of the Silent Hill series, ontological confusion or the inability to separate psychological from physical reality, to structure its narrative. In this respect they remind me of David Lynch's films, especially Lost Highway.  However, instead of hellish, grimy, industrial settings, Harry Mason is placed in an eerily frozen world inhabited by "monsters from the id." These sequences are effective emotionally and tonally, creating a sense of fear and helplessness as the player can do nothing to combat them.                            (>>>>>SPOILERS, do not read on if you have not played the game<<<<).         
 

I like how you use a spoiler tag and then go on spoilering the hell out of the game without tags.
 
Anyway, yeah. My personal GOTY 2009. Clever approach, realized in a clever way, interactive visual storytelling at it's best, with interactivity used as a storytelling device, as it should be with all videogames. Very well-paced, beautiful game that demands several playthroughs and is a worthy successor of the first two Silent Hill games.

Shattered Memories was, in my opinion, the true Silent Hill 4. Climax took what made Silent Hill work, discarded what didn't, and then crafted a memorable, mind-bending experience around that. They also went another ten miles with the sheer level of interactivity of Shattered Memories, and it was brilliant. 
  
It's a real damn shame that Climax will probably never get another crack at Silent Hill. Definitely GOTY 2009 for me.

.....told ya.

I've been thinking about getting this game, but I'm not convinced. You spend an entire paragraph talking about the psychoanalysis aspect of the game, but you don't really say anything about it, if you get what I mean. The environments, monsters and characters change, and that's cool -- but how does that affect your experience? If the game can figure out what scares me and then use it to scare me, it'll be my very next purchase, but all the psychoanalysis stuff I've seen -- stuff like sexy cop/non-sexy cop and the colour of your house -- seems completely meaningless. And it seems to me that the whole "enemies only appear when the world freezes over, and all they do is chase you" thing would completely kill the chance of any actual scares.

@Icemael
 
The game is not particularly scary. Do not play it if you want a scare-me-game. That is not where Shattered Memories shines. It is much more a moody adventure thriller than it is a survival horror game.
 
As for the psychoanalysis part, let me put it this way: (Mild spoilers) Towards the end of the game, you find out who one of the game's characters "truly" is. You find out who he/she truly is and what that means for another character. What the personality of this character ends up being depends on how you play and all of these changes run into this particular theme. So no - the game does not use the knowledge it obtains about you to scare you. It merely incorporates the things it gets to know about you into the environment to confront you with (that is what psychoanalysis is), whether or not you are comfortable with it. There are several dozens of different ending sequence combinations depending on what the game thinks is your personal fitting relationship between these two characters.
 
 
An example that goes beyond the often cited costume and color changes is this: There is a room towards the end of the first third of the game that belongs to a hunter and his son. Depending on how much you care or pay attention to the information about these two, the interior and mood of this room will change. Depending on whether or not you, as a player, tend to look other characters in the eyes during conversation or not, the first thing in this room that you see when you open the door may or may not be a huge, dead, stuffed, bloody bear with a wide open mouth staring directly at you.
Another example is the death of a character later in the game. Depending on what the game thinks of you, it will either try to make you feel you were responsible for this death or it won't. 
 
Know how in Silent Hill 2, your protectiveness of Maria and how often you look at Mary's letter influences the ending that you get? Shattered Memories is that, only it does that constantly and everywhere. 

So the psychoanalysis is not used for scares, but for mood. You certainly need 2+ playthroughs (preferably one with a different person making choices) to notice just how much the game changes everywhere. But it absolutely is more about mood and story and tension than it is about scares.
 
You could also check out me review/blog about the game on my profile.

A look into your blog reveals an absolute and obvious disliking towards non-explicit, visual or interactive storytelling*. You won't like Shattered Memories.
 
*or rather, the unability to find enough enjoyment in games that do not manage to back up their narrative with modern gameplay

Hadn't played a SH game since the first one, that said it was easily my Wii game of the year for 2009. Not that it had a ton of competition though. Desperately tried to get all my friends to play it but to be met with a chorus of "Nah I prefer Resident Evil". Their loss.

@Meowayne

" *or rather, the unability to find enough enjoyment in games that do not manage to back up their narrative with modern gameplay "