I can think of a few "sequels" that can be considered great films. Two which I can think of are Aliens and Terminator 2...but I still liked the original to those films more.

I can remember watching the Godfather for the first time. I was young, and although I liked it, it would be years until I really came to realize just how great it is. After actually seeing the Godfather II, I was amazed. An incessant battle ensued inside my soul which continues to rage today, over which is the better movie...and I have to say I generally lean towards the Godfather II. It is the only sequel to win an academy award for best picture, and rightfully so. Many consider the Godfather to be the greatest film of all time, and it's sequel is just as, if not better than its predecessor.

This film could've been broken into two movies, as a prequel to the Godfather, and as a sequel...my favorite aspect of the movie is when it shows how "the Godfather", portrayed by Robert De Niro came to be so powerful.