As a horror movie "freak," I am not very picky about defining any movie as being the best. That said, one needs to consider the different characteristics defined when one is considering a movie good or not.
First, some people simply love the "blood and gore" depicted in most horror movies. In this category, I love Hostel, Saw (the entire series), and Zombieland.
When looking at pure fear factor, some of the horror movies which are wonderful are Inception, The Skeleton Key, and The Grudge.
There are other movies, included in the horror genre, which can be defined as containing multiple aspects (gore, fear, suspense, etc.). Perhaps my favorite horror movies are Frankenstein, Dracula, and Interview With a Vampire. Given my background in literature, I find that the filmatic adaptations of these movies are well completed.
I have to, also, bring up some of the classic horror movies: Whatever Happened to Baby Jane, American Psycho, and the original Nightmare on Elm Street.