Best sequel goes to System Shock 2, it took all the good parts from the original, enhanced them then to top it off it added more stuff that still blended in perfectly.
Worst sequel: Well, if spiritual sequels count, the it would be Bioshock. Don't get me wrong, it's a great game, but when compared with System Shocks, it just feels empty. If you don't want to count spiritual sequels, then It's a tough choice choosing between: Penumbra:Requiem, Monkey Island 4, HL2EP1, Dawn of War 2 and Modern Warfare 2, but I guess I'll go with Fallout 3 (Once again, not a bad game, but pales in comparison to the originals).