You left out the middle option: 'It was great, but not as great as the original'. Basically, by virtue of trying to fit new characters/events into a pre-existing world, the developers were forced to fit the story to something that couldn't change, and which hadn't accounted for a sequel--at the end of the original BioShock, all of the characters' futures (or lack thereof) have been determined: the little sisters, the player, Andrew Ryan, etc. Therefore, they needed to invent totally new characters (who somehow weren't mentioned at all in the first game, yet appear to have been major players) and new gameplay mechanics (namely being a Big Daddy) because they couldn't just do the same game twice. While the gameplay is just as fun as it was with the first iteration, the story just wasn't quite there this time--and the narrative is a large part of what makes BioShock one of the best games I've ever played (and it's even better if you've read Atlas Shrugged, since the whole game is a counterpoint which takes all of Ayn Rand's arguments and throws them in her face).
BioShock 2 is still a lot of fun, and definitely worth picking up and playing, and it was more or less exactly what I expected it to be, but it's still in the shadow of its spectacular older sibling.