Why are people afraid of sharks?

Because they can kill you, and sometimes do. Very few people can identify sharks in the wild well enough to determine which species they are seeing and whether or not it is dangerous. And while some shark attacks are mistaken identity some are flat out predation. People are, understandably, nervous about creatures which may, due to factors we can't accurately predict, decide you are lunch.

Additionally, sharks are aquatic creatures. Humans face sharks in an environment in which humans are weak and in constant danger of drowning, while the shark is capable of using its full abilities. I believe this sense of comparative helplessness contributes to the scare factor.