The sanity system was shaping up, and testing showed that it affected the player in just the way we wanted.
The player would lose sanity from seeing monsters, from witnessing horrific events, and of course from being in the dark.
The original darkness system required the player to survey large areas in order to form proper strategies, whereas the sanity system worked well in cramped spaces.
The sanity system could get stressful in the wrong way for some players.