True, sequels are great for pioneering new game engines and perfecting old ones (w/o sequels we wouldn't have RE4 :P) but at the same time it's a good thing the industry isn't completely sequel driven and there are companies that just don't do sequels and have gotten along nicely w/o them (Team ICO)
No matter how good a formula is there's just a point where a good concept becomes a corporate whore (Sonic) I mean we all love: Spyro, Ratchet, and Jak games, imagine what it would've been like if they'd stuck with just Spyro all this time?
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