I agree. Don't watch the theatrical version, nor the alternate-ending version of Paranormal Activity.
Buy the DVD for legal purposes and instead
watch the actual
Director's Cut of Paranormal Activity, which is currently only available via torrent. The order of events flows better and makes more sense, there's no CGI, and the ending is way better. How do you know if you have the right version? The director's cut's ending has police officers being shown.
Paranormal Activity 2 is decent, while not quite as good as the director's cut of 1 (though much better than the theatrical version of 1).
3 is crap. I promise you this.
4 is also crap, or so I hear.