Yes, the Dreamcast has a pretty nice selection of survival horror games. There's a good guide here that
goes over all of them, check it out and see if any of them look interesting to you.
I would say that D2 is probably the closest thing on the Dreamcast to a Silent Hill game. It's a bit similar to Silent Hill 2 in its tone, psychological themes, voice acting, sexual imagery, feeling of isolation, and just overall bizarreness. It's definitely different than Silent Hill, but it has a lot of the same artistic flair. I'd definitely recommend it.
There's also The Ring (based on the books/movies), which does have a lot in common with Silent Hill - mainly the dark, otherworld-like environments full of monsters you get transferred into through a computer program, and the emphasis on the flashlight mechanic. Just be warned, it's very low-budget, unpolished, unintentionally silly, and honestly kind of bad, but I enjoyed it. Definitely only for hardcore, very patient horror fans.
I'd also recommend Alone in the Dark, which is more like Resident Evil than it is like Silent Hill, but it still looks great and has some great atmosphere.
Obviously you can't go wrong with Resident Evil, and the Dreamcast has 3 of them. I'd say Code Veronica is the main one to get since it was originally made for the Dreamcast and its also the cheapest.