Between Resident Evil 1 & 2, 1 always had the better atmosphere to me, whereas 2 had the better story. Having thought about it for long enough I would say 2 is the victor, but the nostalgia I have for 1 leaves them at a close tie.
I recently finished Resident Evil 2 after years of putting off the classics......I've now finished it 6 times and its only the week after I started playing.