There is a plethora of action games nowadays. I think it's well deserved for the franchise to return to horror.
Personally I prefer being helpless in my games or at least starting out helpless and eventually assuming power. It's a visceral fear that you're trying to shake but just can't, and to me that's considerably more interesting than being an overpowered boulder-punching meathead who mows down hordes of enemies without ever so much as fearing for your life. Now that's boring.
But you're never overpowered in the older games. You are a little stronger thanks to your arsenal but any of those enemies can still knock you out in two or three hits and you were never flooded with ammo so every fight carried a certain level of tension. That's what made those games so interesting at the time.
The later games kind of had the same thing going for it except that shooting was actually fun. You still had some of the same obstacles in your way it's just that now shooting required more technique and precision if you wanted to succeed. That's how we ended up with a dope ass mode like Mercenaries. Most of the fun came from figuring out the most efficient way of taking out enemies whereas in the older games the most efficient way was always to not fight. It was an interesting switch.
RE7, I feel like I'm going to be doing a lot of running away and conservation. I'm going to be hiding from an old bitch with a lantern most of the time and right now it's unappealing. I have no idea how it's going to play.
Hopefully it turns into something I like. I'm praying for it. But I remember the last time RE tried psychological horror (well, Psycho was a huge influence) and it was Code Veronica. That game was a colossal disappointment.