My husband had night terrors as a child, and now as an adult, he has terrible sleepwalking and bad paranoia at nights (so it's a nightmare for me!) With him, I had to remove all wall hangings (pictures, mirrors, decor) in our bedroom and anything tall on our nightstands, or dressers, like lamps. We also must have a nightlight on.
Your pediatrician should have some good advice on this fairly common behavior.
Now, there is a HUGE difference between night terrors and nightmares. This link will help you determine which it is. I myself, had terrible nightmares as a child, they even effect me sometimes now, but it really helped me was to try mild lucid dreaming.
It can get pretty complicated reading about it, but for a child, it is mostly to help them understand that they are not in a real life situation and they can control it. For us, we were told we had a Superman Belt on in our dreams, and to push the button on our belt (our belly button) to make the bad guys go away in our dreams. It helped.
Also, having a water bottle filled with some glitter as a "monster repellant", and spraying the bedroom a little before nighttime, I have heard can help too.
http://en.wikipedia.org/wiki/Lucid_dream
http://www.web-us.com/lucid/luciddreamingFAQ.htm
http://pediatrics.about.com/cs/sleep/a/night_terrors.htm
http://en.wikipedia.org/wiki/Night_terrors