I think Aliens is the better horror film tbh.
I think Alien works wonderfully up to the point Dallas bites the dust. The film then reached this weird point for me. It's like the film reached a level of paranoia that it can't reasonably back down from, and it got tiring just constantly wondering when the Alien would pop up again and do someone else in.
The whole subplot with Ash I found annoying as well. Might have been new back then, but the whole 'giant corporation cares nothing about people' subplot bored me by the time I got to watching the film (16ish)
Aliens, in comparison, has its definite highs and lows regarding the intensity and suspense. The scene where the marines first enter the colony builds up on intensity and suspense and then allows it to naturally peter out. It also establishes certain elements that lead to even more suspense down the road (the motion tracker).
Basically, you have scenes of great suspense, followed by either character development or scenes that move the plot along, followed by suspense again, and so on. You're allowed to breathe, and I think that's really important in horror films. Horror films that never lets go of the throttle tires me out eventually, I just get tired of being in suspense/scared all the time.
It also benefits from being a sequel. The xenomorphs don't have to be established and so Cameron can play with things that the audience already knows about to generate suspense and tension.
Plus, I think the scares/scenes of suspense are just done better in Aliens than Alien. Alien has the iconic chestburster scene, but the rest of the film relies largely on mood and imagery to generate horror (except the scene with Dallas in the air vent + pretty much the entire third act of the film with Ripley running around everywhere). There's nothing wrong with that, but it made the film feel like a sci-fi adventure for much of its first act than a real horror film.
Aliens has so many effective suspenseful scenes that I'd need to spend another paragraph or so just listing them.
Edit- Well... this thread just made me want to watch Aliens again instead of going to bed. Fuck that movie and how great it is.