The reason that the original Iron Man was so great was not the casting of Robert Downey Jr. (although he was very good,) but it was the somewhat strange-seeming decision to give the directing job to comedian John Favreau, who basically turned the film into an action-comedy, a la Beverley Hills Cop, but better. This decision did lead to some legitimate problems - the climax wasn't particularly good, and sometimes scenes that were serious in tone seem out of place. But on the whole, it was a smart move, leading to one of the best superhero movies ever made.
With Iron Man 2, Favreau has managed to smooth out at least one of the problems with the first movie - the climax is far, far better here. Where the bad guy in the first movie was stopped by just flying really high (lame), the bad guy here is stopped by a goddamn huge explosion, as well as some pretty good fight scenes beforehand. And if we didn't think that was climax-y enough, we have Scarlett Johansen as the Black Widow running around, kicking the shit out of everybody. And if that wasn't enough for you, we also get John Favreau himself, acting like a very low key action hero. It;s pretty good.
The sequel didn't really manage to solve the first film's other major problem - the out of place feel of some of the more serious scenes (such as those set in Afghanistan, where Tony Stark is building the first suit) continues here - the early stuff with Mickey Rourke in Russia just seems like it comes from a totally different movie. Not that it's badly done or anything, it just doesn't feel... right.
So, if the sequel manages to fix one of the major problems with its predecessor, does that make it a better film? Well, no, unfortunately. It may have a better climax, but its journey to that climax is worse. Not so much worse that the film actually becomes bad or anything, and there are things in it that are great (the performances of Sam Rockwell and Samuel L. Jackson spring to mind), but it doesn't have quite as much of that actually-funny-comedy feel that the first film had so much of. There are funny moments - Downey Jr. getting drunk at a party in the Iron Man suit, Don Cheadle's first appearance as James Rhodes (where the film slyly acknowledges that he is being played by a different actor), Sam Rockwell talking about Mickey Rourke's bird over and over again, Samuel L. Jackson yelling, "get down from that donut!" Scarlett Johansen beating the shit out of John Favreau. This was all good stuff, but it wasn't quite as constant as the first film, and there were also no scenes as good as Robert Downey Jr. first trying to use the Iron Man suit to fly.
So, basically, the film was neither as good nor as bad as it could have been. It was enjoyable, but not as much as the first one. It's no Spider Man 2, it didn't actually improve on the first film, but more importantly, it's no Matrix Reloaded, Transformers: Revenge of the Fallen or X-Men 3. It did not actually ruin the first film - it did not make you feel like a moron for ever having liked its predecessor.