Definately.
But with a new story that is not necessarily a direct continuation to the original one. Make a cameo appearance for some of the main characters still alive in the first part, create some new characters and a plotline connected to the events of the first game. Connected, possibly by exploring the after-affects of some of the main plot-points within the first game.
And I'd use about as many man-hours to create that sequel as what went in to the first game. Better graphics, new models, new surroundings, new items and equipment, new voice-acting and brand new dialogues. Perhaps make a few changes to the core mechanics and gameplay, iron them out based on the user experiences on the first game.