The game is scarier without the flashlight mod. The lack simultaneous flashlight with gun creates more tension.
I see it this way. Playing with the flashlight mod, you basically are playing an action/shooter. But, playing in a dark room with the sound up, without the flashlight mod, the game is much, much scarier, and feels totally different. Without the flashlight, the game is much less "run and gun", and it forces you to go slower and soak up more of the atmosphere.
So, there is a very good reason that the flashlight mod was not included in the original game design. They should have included it here, as an option, but it does totally change the way the game feels and plays. IMO, you miss out on some of the best parts of the game, the creepiness, the long moments in the dark just hearing crazy sounds, etc, if you decided to use that mod.
I'm sure people will play it the way that they want, and that some will find playing without the mod annoying, but it really does drastically change the way the game feels and plays. The mod helps from an action perspective, but it hurts from a mood/fear perspective, which is really what the game is meant to be about. Whether you should use the mod or not really depends upon what you expect from the game.