The game itself I think is better than the first Kotor, where it falls short is the character development of the Sith Lords (except Traya), and the ending.
I can see what they were trying to acomplish by not revealing too much information about Nihilus and Sion, but all they did was leave you puzzled. All Kreia really tells you about them was that they were spawned of the horrors of Malachor V, Sion has learned much through pain and is basically being held together by his hatred and power of the dark side. Nihilus is this all powerfull hole in the force, that consumes everything, although when you think about it, what they did with Nihilus makes a lot of sense (they just could have done it better). He is basically this insanely powerfull Sith Lord that gets his power from consuming the force from all living beings, but when he tries to do the same to the exile, he wastes his power on the exile's emptiness and is weakened enough for the exile to be able to defeat him. Also, his language suggests that he may be a true sith (listen to the holocrons in Atris's academy, then listen to Nihilus...anything sound familiar?). Anyway, there was still more that could have been done with both Sion and Nihilus (especially Nihilus) that couldve made people a little less left in the dark when they defeated them.
Then theres the ending which in my opinion...even surpassed Halo 2's ending in COMPLETE STUPIDITY. DS - Traya falls in a pit. Wow. LS - Malachor V goes boom. Wow. Doesnt give you a very big feeling of acomplishment after sitting in front of an Xbox for 30-40 hours..