Because they purposely made it more of an action game to appeal to a more mainstream audience (one of the designers even compared it to Halo). Dead Space was full of tension, and was the last great survival-horror game I played. Dead Space 2, while very enjoyable as a third-person shooter, wasn't even the least bit scary to me.
Wait, what? Dead Space was just as much a shooter as DS2. Seriously, you spend the entire game dismembering aliens with lasers. If you see an alien, you kill it. There's no hiding or running away (unless you were fighting the one invincible alien in both games). Both games had great atmosphere but weren't particularly scary because, again, you could kill anything that posed a threat. Both games were shooters, first and foremost. DS2 was just more of the same. It really baffles me that someone could find DS1 scary but not DS2, when they share the same fundamental gameplay and even most of the same enemies.
If you want real survival horror, you should play Amnesia or Penumbra. If you want a valid example of a survival horror series being turned into a shooter, look at Resident Evil.