Perhaps some reasons behind my decision will make things clearer, even if you would never agree, as the first one is indeed mighty.
1. I preferred Guybrush with his magic inside coat pockets and of course, his beard...
2. I preferred the Zombie Pirate Lechuck
3. It was the first one I played, not entirely sure why, just the way it happened.
4. Many other minor things, including the dog, relationship with elaine, music, JoJo, Largo and much more...
I think there are only two things I would want from the 3rd (and ignoring the 4th) installment, which are Lechucks voiceover artist and Murray.
Edit: On TES: If its Morrowind vs. Oblivion its no contest for MW, but there was a real feeling of ambition when they made Daggerfall, which is why it has a special place in my heart.

One more thing: The Banjo Duel. That was one of the most awesome moments of humour in a computer game ever! :-D
But other than that, I didn't really like 3. Never finished it either. And never played 4. 3D wasn't it? Nah, that's not Monkey Island. I didn't even like the scalable graphics of 3.

I enjoyed 3, despite it having some particularly fiendish puzzles, but at least it was mostly in 2D, and looked very good, the fourth installment looked poor by comparison. Adventure games and 3D don't make good bedfellows! (this is the point at which I get bombarded by examples of 3D adventure games...)

I agree for the most part about 3D Adventure titles Panthro, for some reason the majority of developers decided to spontaneously drop point and click and utilize annoying keyboard control schemes instead, it killed me while playing Escape From Monkey Island. They replaced pixel-hunting with slow-walking, cruising around making sure you were on the exact spot you needed to be for Guybrush to notice an item.

The move to 3D is one of the reasons I never played more than the demo of Grim Fandango, despite hearing many good things about it.
P.S. Iolo sucks?

Iolo acts like he owns the Avatar or something, the ignoramus.

Hmm.. never looked at it like that, although part of me did resent the fact I carried him throughout Ultima 7... (occasionally literally, the combat AI being what it was).
On the sequel subject... what about the Ultima series? I doubt anyone can claim Ultima 2 is the best of the series... (or U1 if you count Ahklabeth, which I don't) or perhaps they should be in groups of three?

Thief 2! The most improved sequel EVER!

I personally consider VI to be the best, but I don't think any of the truly venerable RPG series's applies to the "Sequel Rule".
Wizardry, M&M, the older the games get the more archaic the younger titles appear.
Even if the Ultima series was separated into the separate ages, most of the second releases in those groups wouldn't really be the best in my opinion.
Age of Darkness (UI-III) has Exodus as the best in my opinion, while the Age of Enlightenment (UIV-UVI) has either Ultima IV or Ultima VI as the best depending on who you ask. The Age of Armageddon (UVII-UIX) obviously has Ultima VII as the best since the last two installments blew pretty hard.
For whatever reason, the sequel thing works the best with three-parters, such as Warcraft, I always though WCII was the best.

I have always had a soft spot for U5, although I should really play U6 again... I never managed to truly enjoy using its interface. Although I enjoyed U8, it was filled with bad ideas (not least jumping/platformer type things... argh!) and I haven't had the courage to play U9 yet.
@ Cliftor: I always thought the idea behind the Thief games was better than its execution... although that may be due to my annoyance at the later stages of them, where you're perfectly honed skills at getting past humans are thrown to the four winds as you have to face zombies and robots...

Another game that this rule doesn't apply to is pokemon

I liked Thief 3 better but that's just my personal taste. But I do have to agree that Thief 2 did improve some on the first Thief, mainly in the levels making more sense department and getting rid of those levels where you have run around unsappable undead things.
Ultima Underworld 2 was good second installment. It did improve some things but it didn't take much away from the first game, thus you could play those one after the other and still enjoy them equally.

UVI is much easier if you just make yourself a card with the keyboard shortcuts on it, although if you actually own the game it has all of it in the manual on one neat page.

I was never trying to say Bioshock was better, but I never even heard of System Shock 2 before Bioshock, I even played Deus Ex before hand and still had not heard of System Shock 2.
SS2 appears to me, to be more of a cult hit, and Bioshock appears to be more of a commercial success.
Bioshock even has a direct sequel planned.. There's a work around for every story, why wasn't there another system shoc kgame besides ss1 and ss2?