In terms of foreign films, nearly every country has produced some good ones;
Certainly the Spanish films of Pan's Labyrinth and The Devil's Backbone are brilliant, but there are heaps of other good ones too...
There's a lot of good German Films; Das Boot, M, Nosferatu, Downfall, Run Lola Run, Anatomie, Twin Sisters, Downfall, Christiane F.
Lots and lots of French Films; Three Colors Trilogy, Angel-A, City of Lost Children, Delicatessen, Amelie, Betty Blue, The Piano Teacher, High Tension
The Japanese and Asian countries seem to have modern horror cornered; Red Shoes, Ringu, Grudge, Host, etc but don't forget that they also do Anime and a lot of Action (ie: Jackie Chan etc) and Epic (Ran). BTW: Has anyone seen the Audition?
I find that a lot of the countries have pretty good films; Life is Beautiful (Italian), Lilya-4-Ever / Nightwatch (Russian), Evil (Swedish).
Does Australia count as foreign? Have you seen; Breaker Morant, Storm Boy/Blue Fin, Alexandra's Project, Bad Boy Bubby, The Castle, The Dish, Muriel's Wedding, Newsfront ?