Well, you know how you look forward to a sequel to a really great movie while at the same time dreading it? You can rest easy, Shrek 2 was great (with a few caveats for parents). You'll be laughing from the first five minutes.
The best thing a sequel can do is to take the same characters and go in a different direction. Take the story from the original film, change it only slightly and you've got a recipe for boredom. For an example, look at the Lethal Weapon movies. First one was great (for what it was). Second one wasn't bad, but then the series became formulaic (Hey, it worked once, didn't it?) and went down the tubes.
In the original Shrek, Dreamworks took aim at the classic Disney stories and characters with broad strokes... poking good-spirited fun at them. Been there, done that. It's funny once, but if it was repeated here in the same way it would have gotten old fast. In Shrek 2, they've pulled in references to other well-known films with a nudge and a wink, and it's great for bringing either just a grin to your face or a hearty laugh out of you.
Some of the memorable characters from the first film are back: Pinocchio, the wolf in grandmother's clothing, the gingerbread man, and the three blind mice. Although they were funny, some of the jokes involving these guys bothered me a bit. More on that later.
Here we also learn that even fairy godmothers don't give you something for nothing, and that there is a price to be paid for their good favors. I don't want to give too much away, but the relationships in this story were inspired!
The CGI is incredible. I found myself pulled out of the movie at times, not due to poor animation, but because it was so fantastic. The detail and subtlety in the faces of the characters was such that it was almost eerie. Perhaps the animators went a bit too close to realism in the renderings...
Ok, here are my issues with this, a PG film. Why is it necessary to have sexual humour in a film of this type? It still would have been funny without this sort of thing. Every time one of these bits came up, it could have been replaced with something else. There were references to "being sexy", tight tushes, a character being "gender confused" and one male character wearing women's thong underwear.
While I really liked the film overall, these bits took away from my enjoyment of the film.