The best sequel to date remains Super Smash Bros. Melee. It improved so much over the original it wasn't even funny. I can't say anything about Brawl really, it looks like it will be a better game, but probably not a better sequel.
RE4 was also amazing, injecting new (and a lot of) blood into a stagnating series. And there could hardly have been a better follow-up for Super Mario Sunshine than SMG.
Other mentions: Mario Kart Wii, Timesplitters: Future Perfect, Ocarina of Time, Twilight Princess.
I drink your milkshake.