A bit weaker on the story side, but still a worthy sequel to a now classic game.
First of all, if you have not played the original Star Wars: KOTOR, then forget about this sequel, go play that one instead. If you enjoyed the first game then you'll enjoy KOTOR 2, because it's just alot more of the same thing.
The story is good, but it doesn't come together at the end as well as the first one did. Don't expect the awesome story the first one had, but expect one that has its great moments but lacks polish.
As for the gameplay, there are new force powers added, and several minor tweaks that make gameplay more friendly. An example is that you can equip 2 sets of items per person, and toggle them at the push of a button.
The story is more cinematic then the first one. You will often switch scenes from one character to another, and therefore not always have your main character in your party (although for the most part you will). Also, almost every character can be trained to become a jedi, after gaining the right prerequisites, which is normally just enough influence with them.
Problems I faced was incompatibility with Vista. Fortunately if you google you can find a fix, which is copying a file from KOTOR into the KOTOR 2 directory. The file can be downloaded from the internet. I also got more than my fair share of crashes to desktop, so save often. There are numerous plot advancement glitches that can halt the game completely, so make sure you save many different files. I had to restart 20 hours in because I only saved over my save file, and there was no hack to progress further after getting stuck.
Story-wise, I found the Sith boss characters particularly underwhelming. There is little to no character development from them, and they are for the most part archetypal evil figures, with no reason for their actions.
TL:DR = You will enjoy this game if you enjoyed KOTOR1. The gameplay improvements are satisfying, and the story is satisfying but nothing to brag about.