What some of you are describing are called hypnagogic hallucinations. They're literally 'waking dreams'. It happens when you're partially awake, but your brain is actually still in a REM state. In other words, you're starting to wake up, but your brain is still dreaming.
Here's an article from Wikipedia:
http://en.wikipedia.org/wiki/Hypnagogic
I've had two of these in my lifetime, and boy, are they unforgettable. Very, very vivid and real. From what I've read, the hallucinations are usually of something monstrous or frightening. I think this might explain the OP's experience, and some of the other sleep-associated experiences.
Of course, it doesn't explain the noises that several wide-awake people hear at the same time, or the people appearing in windows....