3rd Person simply because I like it much more than FPS. ( <--- Refuse to play any HALO game cuz of that.)

Think about your controls and how the player is expected to interact with the world. What viewpoint the player prefers doesn't matter as much as making a good control scheme that your perspective works well with.

There are first person shooters with clunky controls and fickle contextual cues, and there's third person games with terrible camera work and poor aiming systems. Pick whatever works for the system you design - Players that might "refuse to play your game cuz of" your camera choice will balance out either way, so individual preference shouldn't really be a concern.

In general, first person is popular for ranged combat, and third person for melee or movement/acrobatics, so take a look at how players will be spending time in your game. Some first person games have an option to automatically switch to third when a melee weapon is equipped. You could even have a camera toggle so the player gets to decide what works for them, and when.

If you make a good game, with intuitive controls and a smooth interface, generally people will play it.

Depending on the resources available to you, I'd say first person is easier to do well. Third-person requires some fancy character animations to make it atmospheric, for me, so if I'm going to be looking at a robotic little monster while I play your game, I'll prefer first-person to that. But if you've got the people and tools to make the character impressive, then by all means show it off.

In terms of gameplay, I tend to prefer third-person, since it lets me see where my feet are and what exactly is chewing on my neck, the sort of thing that would be intuitively obvious if I was actually there, but can be tough to show in first-person games, since there's no tactile feedback or peripheral vision.

For good feelings in a videogame, I have two features that I've become enamored of recently, and I hope you'll consider them:

In Minecraft, ArmA 2, and any other first-person game that allows it, I always try to max out the field of view. If I could go straight fish-eye and give myself 270 degrees of vision, I totally would. ArmA, in particular, has a great and simple way to switch between three different "zoom" levels, allowing me to hot-swap my FOV from about 40, 60, or 90 degrees with the press of a button. Whether I'm in first person or third, I find that incredibly powerful and handy. Running around, scanning the countryside, I'll zoom out and maximise my situational awareness. If I'm on a ridge watching a valley for signs of enemy activity, I'll focus right in on it and ignore my immediate surroundings. If I'm clearing a house or doing other normal stuff, the default zoom is fine. Great, great feature.

The other great feature I find in ArmA is the ability to look around independent of the direction I'm moving. It feels good and works smoothly, and I get a lot of use out of that feature. It makes me feel more like a person and less like either a disembodied camera or bipedal tank.

Don't think that first person increases the fear factor.
Dead Space and Alan Wake are wonderful examples of how a third person can still be scary.
If you do go the first person pov rout then you would be competing with games such as Left4Dead and Dead Island (Yikes!)

This all depends on your game, but I feel like there is more of a connection to the character in 3rd person, because you get to see them.

Hi, I actually asked a similar question although it is regarding first person melee combat games like Dead Island. The replies have great answers to your question.

http://www.gamedev.net/topic/633908-first-person-melee-games-why-do-these-games-use-1st-person-instead-of-3rd-person/

One more thing, you can always try Dead Rising (3rd person) and Dead Island (1st Person) and compare the two and see which one fancies you. Both have great melee combat with makeshift weapons.