is the storyline of gothic 2 a direct sequel to gothic 1, so that one really ought to play them in order? i am thinking of buying gothic 2 but i don't really want to buy gothic 1 because of the aged graphics, and i have a pet peeve of playing storyline games out of order...

It is a sequel, yes, same as Gothic 3 is to G2.

But you don't have to play Gothic 1, to get into Gothic 2. If you do, though, the immersion is totally different.

I think the designers planned for that. I may be wrong (it's true for III) but I think there are options in II for your character not remembering who his friends were.

You play the same character, meet a lot of characters from the first game, and it takes place a few weeks after Gothic I.
On the other side, the stories of both stories are pretty much self-contained, and everything you'd need to know is told to you. Like lordhoff said, you can play you're character as having amnesia, so if you meet an old friend, they will tell you who they are.

I know it's definitely possible playing the 2nd one first, because I did it myself, but if I could do it again, I think I would play them chronologically this time.