I think the only reason DAY OF THE DEAD isn't given the same respect George A. Romero's previous two DEAD films (NIGHT OF THE LIVING DEAD, DAWN OF THE DEAD) is precisely because it's taken as the third part of a trilogy, as opposed to a separate film, dealing with separate issues, that happens to take place in the same environment. Watching it again after the resurrection of the zombie genre (28 DAYS LATER, the big budget remake of Romero's own DAWN... as well as his own follow-up, LAND OF THE DEAD) reminds me of how effective the film actually is. After skewering the racial tensions of the 60's and consumerism in the 70's, DAY OF THE DEAD focuses on the 80's government/military paranoia (something strangely relevant today) and treats the situation a bit more seriously than perhaps fans and critics wanted. So it makes for a purposefully darker film, and one that get better upon repeated viewings.
The plot in short: A small band of scientists and soldiers live in an underground bunker, going outside only for supplies and fresh zombies for experimentation. One look at the outside and you can tell the problem of these pesky ghouls hasn't gone away; there are more than ever, being held by chain-link fences and few guards. Tensions mount inside the bunker as the soldiers, led by a clearly maniacal Joe Pilato begin to lose it in the face of the death of their (former) immediate superior. Their anger is directed at the scientists, who they believe are the cause of all their problems in the base. Eventually, everything goes to hell in a hand basket as the zombies get into the compound and it's a fight for survival and the helicopter above ground (hmm, sounds like the last movie...). Lori Cardille as Sarah, the heroine of the movie is fantastic - one of the most frightening images I held on to as a kid is the opening scene of her in the cell with only a calendar. Man, that shit stayed with me for a while. The effects by Tom Savini are the best in the series - my favorite is the "brain" zombie on the operating table. All around this is the goriest film in the series, and deserves a better rep than it typically gets.
Is it scary? Well, I would argue there are a few scenes that will grab you, but it's more the gore and the feeling of hopelessness in the face of everything that drives this one up to the top.