Well, there are several effects that already function like sanity. Intimidate, for example, causes someone to 'freeze in fear' during combat. That might be good for random huge monsters. Maybe give them the ability to Intimidate as a move action or automatically with the first round. or something.
In my game, which strongly features a vast series of necromantic kingdoms, with all sorts of horrible experiments and creations, I occasionally have the players make Will saves out of combat. You know, walking through a gallery filled with mutated zombies (five armed creature, another covered with eyes, ...). If they fail, they are frozen in fear for a moment (except, of course, for the paladin!)
No long term effects, but I think it adds a low key sense of drama. The horror seeps in from knowing what they fight... people who keep other people in breeding camps for raw materials.