I find that is generally the case, however it can be offset by noticeable improvements in a game's quality and/or improved marketing over its predecessor.

Devil May Cry 3, for example, outsold Devil May Cry 2 rather significantly last gen, and this can be attributed to the fact that DMC3 is the much better game between the two.  This gen, Modern Warfare 2 has outsold the original Modern Warfare handedly, as a result of Activision's significantly increased marketing for the sequel.

Uncharted 2 also outsold its predecessor handedly, a result of both noticeable improvements to the main game backed by a much improved marketing campaign.  Halo: Reach is also looking like it may top Halo 3, for similar reasons.  Same happened with Halo 2 over Halo.

By all accounts, Killzone 3 is looking to be a much better game than Killzone 2 (especially if it does end up having co-op), and on top of that it should be marketed better than Killzone 2, so I believe it should be able to enjoy an improvement in sales similar to the Uncharted franchise.

Since the ps3's uptake in sales post-Slim, Sony has really amped up the advertising for their first party releases, attempting to turn their more popular IPs into system sellers (seeing as they can no longer rely on third parties for such marquee titles).  They have done this with both Uncharted 2 and God of War III, and I have no doubt both LittleBigPlanet 2 and Killzone 3 will be marketed much better than their predecessors as well.  These alongside Gran Turismo are their five biggest IPs at the moment. 

Killzone in particular is SCE's flagship FPS franchise, and it's obvious they're trying to make it their own exclusive Halo/Call of Duty/Battlefield.  They're definitely going to try and make this one bigger than the last, though I admit it could fail to happen.

about 800-900 thousand first week. Maybe 2.5-3 million lifetime. Maybe 4 million if its a little better and lots of advertising.

I find it funny how when some random dude on this site predict 7 million for gears 3 and every sony fanboy flamed the crap out of him. Now those sony fans expect killzone 3 to double what killzone 2 did! HAHA

My prediction

500K first week

2.9-3.2 million life time.

I basing this off the dead online community and the fact that that most consumers wont see a difference between the two games. Killzone 2 was not loved like every sony internet nerd made it out to seem lots of people thought it sucked and the online community users just proved my point.

I bolded the irrelevant.