Fear is not necessarily a bad thing.
I'm careful around sharp objects because I fear getting stabbed/cut.
I fear plenty of things for good reason.
I make a distinction between fear and caution, and also between fear and reflexive responses.
The kind of fear in "God-fearing" is the kind that is meant to ignite the sense of self preservation and hijack the nervous and limbic systems. Indoctrination and habituation of this kind of fear can result in a lifetime of things like anxiety and addiction.
Experiencing the mere presence of another person (magical, imaginary or otherwise) who may be witnessing does have an impact on behavior, and need not have anything to do with fear.
Derren Brown got in on this one, too, but I can't find the video. He had people perform a counting task, I think it was, with no one in the room with them, and promise of reward if they did well. Not knowing they were on hidden camera, a bunch of them cheated. When Derren put a chair in the room and told people that the chair was thought to be haunted, the honesty rate went way up.
Even those who didn't believe in ghosts cheated less. In other words, the mere suggestion of someone watching reduced the cheating.
As a social species, the most powerful drivers of our individual choices and behaviors involve others, others' reactions, others' judgments, others' well being, others' presence. From a neurotic fear of being judged to altruism and cooperation, this is how we operate.
Fear is not this. Fear is something added to the equation for control, or for sadism, or unwittingly.
Ted Haggard's a good example. If he really believed in a God watching his every move, how could he have had the nerve to rent a male prostitute after moralizing so adamantly publicly against precisely that? Whatever Ted fears, it ain't an all-powerful, all-seeing God. Ted did what he did because he thought
no other humans would see or find out.