The best PS1 game ever? Hell's yeah!
Well, for one thing, there are the beautiful graphics. Fear Effect is an incredibly slick and polished visual experience: moving characters on endlessly looping backgrounds. The latter is where the beauty of this game lies. Most of the first disc is set on the rooftop of a futuristic building, and every scene on the rooftop is amazing to look at. The backgrounds are full of life. In addition, the transitions between gameplay and cutscenes are seamless and never distracting, making for the PS1's best imaginable visual experience. At least until the sequel...
The gameplay does take some getting used to, but once you know it, it's easy. Also of note are the brain-melting puzzles. Though the puzzles are difficult, they're usually entertaining to solve, and usually have a subtle touch of creativity to them.
If you're bored of current- or next-gen console games that prefer flash over substance, go buy this game, where the two are appropriately balanced.