Fear (http://nifflas.lpchip.nl/index.php?topic=900.0), by A Clockwork Lemon, is a level I just discovered last night and is wonderful. (This is a fixed version, so if you played the previous, overly death-addled one, definitely try the new version!) Despite what others have said -- and despite the low likelihood of actual death, coupled with reasonably-placed savepoints -- I absolutely found this level spooky even at its least-scary points. The striking "2.5-d" visual effect, combined with the use of tilesets, default and custom objects, ambient sound and music all worked to create a feeling of trepidation, almost anxiety. Very unusual for an otherwise exploration-focussed level. The only other level (playable by us Crap Players) I can think of that achieves a similarly fear-evocative atmosphere is:
Dessgeega's Torchlight (http://www.knyttlevels.com/levels/dessgeega%20-%20Torchlight.knytt.bin). Like 'Fear' it's best played in a darkened windowless room, or at night... at least by me, as screen-glare makes it impossible for me to navigate dark, low-contrast screens during daylight hours. Some players may find these two too eerie for nighttime play, however; I actually first began playing 'Torchlight' while showing KS to my assistant's 6-year-old daughter, and quickly decided it was too scary for her and moved on to a more kiddie-friendly level. Excellent use of pure darkness and 'blind' navigation in this level. Expect to die a few times for trial-and-error purposes, but so long as you use your savepoints the deaths shouldn't feel unfair.
Under the Crack (http://www.knyttlevels.com/levels/dessgeega%20-%20Under%20the%20Crack.knytt.bin) is another gem of a level from Dessgeega / Auntie Pixelante / Anna Anthropy (she uses all three nicks in various settings). It uses custom gradients and tilesets for a subdued but striking moody, monochromatic effect. There are some tricky jumps here, but the level is so well-designed in terms of making the correct route obvious that it would actually work well as a text-free trick-jumping tutorial. (Dessgeega has 2 other games which are both playable even by -- most -- Crap Players, 'Fossil' and 'The Lighthouse'; 'Lighthouse' is unusually linear for a KS level and consists mainly of assorted trick jumps, while 'Fossil' is of the turn-off-that-machine genre. Hmpf says Dessgeega's other game, 'Oubliette', should be beatable by a patient Crap Player, but I've yet to give it a second try. All her games are on the Knytt Stories Level Archive (http://www.knyttlevels.com/) under the name Dessgeega, and also usually via her website (http://www.auntiepixelante.com/portfolio/), though it seems to be down at the moment.)
The Deserted Rustyard (http://nifflas.lpchip.nl/index.php?topic=1288.msg13766#msg13766) by Bligglenuber uses custom objects, combined with a borrowed non-Knytt tileset, to amazing effect. The visual feel of the level fits with KS while at the same time seeming utterly foreign -- which, as the storyline tells us, is perfectly fitting. There are some tricky jumps here, but nothing that should require more than a few tries at most; just save often and even the crappest players should be fine. Excellent storytelling... some of which you'll need to be careful not to miss by rushing through the level. Definitely another gem for players whose exploration and art-appreciation skills are better-honed than their reflexes are.
Back to some levels that feature confounding darkness in at least some of their areas...
Organac (http://www.knyttlevels.com/levels/Salmoneous%20-%20Organac.knytt.bin) by Salmoneus (aka Elder... I think?) is another level that showcases the mood-setting effect custom tilesets can have. Due to its largely-dark and often low-contrast screens, coupled with a transparent Juni sprite, 'Organac' should probably be played in a darkened room to enhance visibility ...and atmosphere. Not scary or even really creepy, unlike 'Fear', 'Organac' is however definitely eerie in many areas. You'll need to re-navigate various parts of this labyrinthine level in order to collect all the items you need to reach the ending -- but it's very much worth the time and effort.
Another Journey (http://www.knyttlevels.com/levels/Imaddo%20-%20Another%20Journey.knytt.bin.knytt.bin) by Imaddo is plenty well-lit in most of its areas, but there are a few places where monitor glare could make low-contrast screens nearly impossible to navigate. A medium-large level with varied, attractive and singularly-creative locations for Juni to visit, and some delightful surprises achieved via clever use of shifts (look in particular for the city of spirals and bridges, and the city consisting of one huge interconnected apartment building) makes this an excellent choice for anyone wanting something similar after exhausting all of Gaia (http://www.knyttlevels.com/levels/Anyndel%20%26%20Drakkan%20-%20Gaia.knytt.bin)'s possibilities, or just wanting a smaller-scope level they can finish in a more reasonable length of time.
Imaddo's Knytt on the Moon (http://www.knyttlevels.com/levels/Imaddo%20-%20Knytt%20on%20the%20Moon.knytt.bin) is another fun, charming, verging-on-adorable level that's quite friendly to us Crap Players. It again features some unique (so far as I've seen) uses of shifts, a semi-labyrinth-semi-maze layout, and multiple endings to reward the diligent explorer. Smaller than 'Another Journey' yet not less satisfying.
Juni's Journey (http://nifflas.lpchip.nl/index.php?topic=2814.0) by Artix was originally put up on the old forums but was just re-released here (and uploaded to the archive (http://www.knyttlevels.com/levels/Artix%20-%20Junis%20Journey.knytt.bin)). It's been up less than 24 hours, so I haven't finished playing through the whole thing yet. It may have more challenge than Crap Players like myself can quite handle; I can't say for sure yet. However, just in the part I have explored, I've found three items and at least five 'secret' areas, depending on what one counts as secret, by various means. It's something of an 'old-school' level, and so far seems to use mainly standard tilesets, but... well, here's what I said about it in its release-announcement thread: "Most of the time it's visually subdued rather than spectacular; but, for example, there's one drop sequence between a 'just for decoration' part of the screen and a save-point where I dropped & ctrl-R'd repeatedly just to enjoy the view." Worth a try unless you're the sort who really, really hates having to give up on an apparently-easy-difficulty environmental level when it suddenly gets harder a good ways in, just in case it does do that.
Finally, Trek (http://www.knyttlevels.com/levels/Terv%20-%20Trek%20%28final%29.knytt.bin) by Terv is possibly the most Gaia-like level I've come across in several aspects: size, low-death design, quirky randomness, slowly-unfolding storyline, and unexpected/secret areas that don't always simply dead-end with a minor reward for finding them.