I think it just depends on the theory behind he sequel. There are a few of different types of sequels, and one can often get a feel for the quality by determining which category of sequel it is:
(in declining order of quality)
1) Those that continue a story (Godfather, Star Wars, etc.)
2) Those that further a franchise (James Bond movies)
3) Those that are a sort of "continuing adventures of" (Legally Blonde II and pretty much most other sequels fit into this category.)
4) Those that have absolutely nothing to do with anything related to the original, and are only made to scare up some bucks capitalising on the name. (Blair Witch II:Book of Shadows, Jaws III and IV, etc.)
Horror movies have probably the worst track record for sequels, because of a number of factors: most horror films are made on insanely cheap budgets, so there isn't so much at stake -- and most of them actually do make money once they hit the home video market. Also, horror movies tend to be "off limits" for younger people, and chances are if you stayed up late and snuck a view of Nightmare on Elm Street on HBO when you were a little kid, it scared the shit out of you, and once you get old enough you'll pony up the dough to go see Nightmare on Elm Street Part 657: We Just Can't Kill this Asshole even if in your mind you know that it will probably suck serious donkey dick.
The Nightmare series could have stopeed with the third installment. Most horror series should stop with the one where they "really really figured out how to kill him this time" installment. The resurgent, unkillable killer is a product of the horror market's misunderstanding of the Friday the 13th movies. Ask anyone, ask yourself, most likely you think that the F13 series is about this unstoppable killer named Jason, and you'd be wrong. The people who "inherited" control over the franchise made it into a laughingstock, but Jason was not originally some killed over and over ghoul who kept coming back. He wasn't in the first and fifth installments as a main character (his mother, Susan Voorhees, was the killer in the first one; a deranged paramedic who lost a child to Jason was the killer in the fifth, which is actually a pretty good flick btw) Jason is killed in the fourth installment, and comes back to life in the sixth -- and when he was killed in that one, they should have left it alone. Unfortunately they didn't. And as of this summer, with Freddy vs. Jason coming out, it seems that they still haven't.
At any rate, my vote for the worst-ever sequel is beyond a shadow of a doubt Exorcist II. This falls into category '4' above, having little if anything to do with the original film or William Peter Blatty's blood-chilling book, and capitalising only on the title and Linda Blair's willingness to debase herself for money. (Exorcist III, which is based on the book Legion and is the actual sequel to the original story, is excellent.)
My vote for best sequel may seem a little weird, but it's Predator II. While P2 didn't exactly sweep the box office or the Oscars, I think that it was much, much better than the original, which took a very interesting concept and buried it in Hollywood's obsession with a string of movies that could all of have universally titled A Very Big Man vs. Something Bad. Danny Glover was a very believable protagonist, and the much deeper exploration of the Predator's "lair" was very interesting.
One movie that is not really a sequel but a crossover of two stories which I am damned ready to get filmed and released is Aliens vs. Predators. This was a comic book "mini-series" in the early 90's and seriously kicks ass. I worry that Hollywood will, well, Hollywood it to death, but as they've started and stopped making this movie almost as many times as they did the X-Men series, maybe by the time it finally hits production it will be in the hands of someone who wants to retain the feel of the storyline.
Phaedrus