Seems to me it's pretty much either/or. Either the ghosts are real, or she is insane. I lean towards thinking that the ghosts are real, because the boy was conjuring the dead, and he dropped dead when she seemed to exorcise him of the ghost. I don't think that her insanity would be the best explanation of those things. If the ghosts were real, I think she was sane throughout. But, seeing the child dead could easily have driven her insane. If so, we didn't get to see it, because the film ended.

I liked it quite a bit. I'll admit that I would have at least liked a few more hints as to what was real. There is some discussion of this film in the Spiral Staircase thread.