Darc is 100% right.
KOTOR2 was rushed to Christmas, and suffered major issues. Heck, the DVDs actually have half of the endgame cutscenes (the real endings). But they aren't viewable due to Obsidian never finishing them.
There actually is a full version KOTOR 2 in the works - fans of KOTOR 1/2 are re-working the cutscenes and the endgame to what Obsidian really wanted.
KOTOR 3 is in the works as far as I've heard, but Mass Effect comes first. ME is the spiritual sequel to KOTOR. Nevertheless, as far as I've heard, KOTOR 3 is underway, but might be years (ie, 2010+) till it comes out.