I guess if by sequel any game added to the franchise can count (whereas normally a sequel would discount games without story lines, but I don't think Smash has a story, GTAII and III don't really connect story-wise, and I haven't played them but I suspect Pokemon games don't really have connecting stories either, so I'm gonna use the definition of great sequel to mean a game improving upon a previous entry to the franchise)
With that in mind:
Timesplitters 2
F-Zero X
Mario Kart: Double Dash
Mario Kart Wii
Pilotwings 64
Endless Ocean 2
Metroid Prime 3
Banjo-Tooie
Half-Life 2
GTAIII and Vice City
LoZ: Majora's Mask, and Windwaker... and I probably would have said Skyward Sword 2 months back, but I'm not sure I rate it above TP anymore.
I tend not to play through whole franchises much, so I haven't played the previous installments of these games, but I suspect if I had I would be able to add them to the above list:
Star Wars Rogue Squadron II
Wave Race: Blue Storm
Resident Evil 4
Actually if I am going to be pedantic I guess both Twilight Princess and Skyward Sword fit in here too due to handheld games coming in between the main console Zeldas
