For a theatrical sequel, Toy Story 2 hands down. I remember loving it when I was watching it when it came out to theatrers. I definitely thought that the storyline was improved over the first movie, which was still great, and I loved the emotions Woody was feeling as he feared over losing Andy forever.
As for a direct-to-DVD sequel, I would have to say the Lion King 2. While it didn't have the same feeling to it as the original Lion King did, the movie did quite well with its own story. I consider it to be one of Disney's better DVD sequels. The voice acting was great and I thought that it was written quite nicely. They also put much more effort into the songs in the movie than many of their other sequels.
I agree. Aladdin and the King of Thieves was a great movie and much better than the Return of Jafar. It was a good movie to end with after the television series. I think the Return of Jafar would have worked better if it was the series premier instead of the movie that started the series. Robin Williams' return in the King of Thieves was one of the highlights of the movie, as well as Aladdin meeting and connecting with his father before he got married to Jasmine.
In terms of worst sequels, I have a couple in mind that I'll list here.
Mulan 2: I enjoyed the first Mulan movie. I loved how Mulan wasn't like all of the other girls and chose to fight in the war to save her father. I also loved how she fought more with her mind, rather than with weapons. By the end, she brings honor to her family and she knows her true strength. This movie, on the other hand, felt like a complete waste of time. The story itself was kind of weak and all of the songs felt like cheep versions of the songs from the original movie. The fact that the three soliders from the movie fell in love with and got to marry the emperor's daughters was kind of lame too. The only parts of the movie that I would consider even good were when Shang let go of Mulan in order to save her from falling off the bridge, when Mulan was willing to sacrifice herself to the other emperor's son so that the rest of her friends could live in happiness, and when Mushu performed the marriage ceremony for Mulan and Shang. This just felt like a seriously unneeded sequel.
Pocahontas 2: I enjoyed watching the first Pocahontas movie as well. I didn't like how Pocahontas was turned into a Native American Barbie and John Smith into Ken, but I did enjoy much of the music, the message and the art work in the movie. I also liked how it did have a bitter sweet ending to it, which most of Disney's movies don't have that often. As for this sequel, it also felt unnecessiary. I just didn't like how the story flowed and how most of the songs were weak, especially in comparsion with the original songs. The story itself didn't match up with the original as well. The way Ratcliff knew Pocahontas felt weird because of how they didn't really interact at all during the first movie.
Some of the few up sides to the movie was how it was more historically accruate with who Pocahontas ends up marrying, a nice ending song during the criedts, the only good song in the whole movie, and a disclaimer that said that the movie was a fictious accound of her real life and go to a library to read about the actual Pocahontas. I'm not sure if they even had that in the first movie, but I'm glad that they did it for this sequel.