Zero Punctuation: Amnesia: A Machine For Pigs

[grrrz]

The point is, the insanity system a good idea, it just needed to be worked on. But no, it wasn't improved, it was removed instead.

The sanity system was relevant for someone who was afraid of the dark. different characters, different effects. I find the "changing environment" effect much more efficient for questioning your sanity. There was something similar in black plague (you were inhabited by a spirit who sometimes changed your perception, making doors dissapeared).
I also found the fear and vision system much more effective as a mechanic in Penumbra. If you crouched and didn't move, you could see better in the dark, If you looked at a creature directly, you would panick and reveal yourself.