GameSpot has an article on Call of Cthulhu: Dark Corners of the Earth, an H. P. Lovecraft-themed first-person adventure game that's in the works. Like the paper-based RPG, it has a "sanity system" that makes it hard to progress if your character has been exposed to too many Unthinkable Horrors. From the article:
Sanity effects include things like hallucinations and visual distortions (motion blur, etc.) as well as your character showing obsessive behavior such as nervous twitches or constantly loading and unloading his gun.
This provides incentive to avoid enemies, which is consistent with Lovecraft's central horror theme. ("Run away from the baddies, there are no baddies, everything is fine, I didn't see a thing. What baddies?") So far so good. Unfortunately, the article also says "You can gain sanity back by slaying evil creatures..." Sort of like having a Mohandas Gandhi game where you gain Nonviolence Points by kicking people's asses.