It really depends on WHY you're making a sequel, doesn't it? If you're making a sequel for the cash-in or to be a placeholder for another sequel down the line, then of course you'll end up with a Bioshock 2 or AC: Revelations, respectively (both I haven't played btw, but that's the gist of reviews I've read and what my friends have said).
However, surely a smart dev would realise a sequel is also a convinient way to take what you've learned from the original (what worked and what didn't, what the audience found intriguing, etc) and expand upon it to create a more refined and, ideally, superior experience. There are many sequels in gaming that attest to this.
Then again, a series should probably end once it has dwindled out of ideas and the story has already gone where it was intended to go. Too many series' out there begin to decay after the 2nd installment. I actually think the dangers of sequels in games are narrative related, because once the story and characters lose their intrigue there is less reason to care about the action. Tighter, more contained stories have a lot more impact and how it is paced is what makes the difference.