Spoilers and so forth. You have been warned I would like to start off my review by defending the actor who played Cyclops in the movie. Cyclops is a whiny character in the comic books too.
As an avid reader of the comic books will tell you, the mutant powers in X-Men have always been a subtle to not so subtle metaphor for homosexuality - see Randofu's writeup in this nodeshell. In the movie, this is ratcheted up a few notches. For example, when Bobby tells his parents about his...er...abilities, his mother asks him if he could try not being a mutant - the writer is trying to make the point that homosexuality is less a choice than it is an expression of one's self, blah blah blah. Also, Commander Stryker is angry at Xavier because he couldn't "cure" his son of being a mutant, to which Charles answers that being a mutant is not a disease, blah blah blah.
But enough of that; here's where I attempt to cover what the noder above did not. As the person above me said, this movie is better than the original in every way - though of course it does not go beyond being a silly action flick; this is the x-men after all (you were expecting perhaps Citizen Kane?) Alan Cumming as Nightcrawler is an added treat due to his superb performance, not to mention the fact that Nightcrawler's teleport ability is soooo cool looking - much better than it looked in the comic books. Patrick Stewart is still alive and kicking in this movie, proving once again he has what it takes - with each new X-Men movie I am more and more convinced that Stewart really is Xavier.
My three problems with the movie: the actor who plays Bobby's mutant hating brother shows up later in the movie as one of the mutant children the X-Men are trying to rescue - huh? (correct me if I am wrong, I didn't watch the credits) Also, for some reason the ship the X-Men use has no countermeasures on board; this is done so that the writers can throw in more mutant effects, but it's a cheap trick. Now this is being really picky, but in the ending scene Jean Grey says that evolution normally takes thousands of years - try millions - and states that occassionally evolution takes a leap forward - no it does not, unless everyone on the earth was exposed to massive amounts of radiation and somehow survived. If you want to make the X-Men story sound realistic, fine. But don't lie in order to do that.
Finally I have to give props for the ending scene - well done.
On the subject of the Pheonix Saga: I would have to say the next movie will have to deal with this. The reasons for this are as follows:
Without giving anything away, the Pheonix has begun to take over Jean Grey and as such it is fairly impossible to ignore; the non-comic book reading movie watchers are probably very confused at this point - for those who haven't seen the movie, Jean Grey is inexplicably engulfed in flame in the second to last scene. The Pheonix Saga is huge, it would take at least a whole movie to cover the material so if they do decide to make X3 about it the saga will easily fill the entire film. It is the perfect plot line: it ups the ante thus allowing for a more significant story and better special effects, and it is already written out; all the writers have to do is make a few changes so it seems like they actually did something. So what does this all mean to you? If you liked the original, you'll love the sequel. If you didn't like the original, you may or may not like/love the sequel.
Oh, and if you can figure out why T.H. White's classic novel The Once and Future King shows up twice in the movie, kudos. I'm stumped (for some possible ideas, check out the nodeshell The Once and Future King). Possible ideas noders have informed me of:althorrat says that it could have to do with the title of the novel The Once and Future King. Just as Arthur will come back, Jean will come back. On the subject of Punctuated Equilibrium as a reason for sudden evolution -this is not a very valid explanation of what happens in the X-Men. For one thing, people are not very likely to sleep with someone because they are a mutant, and there is no evidence that Mutants survive longer; in fact given their hunted status they would be expected to live shorter lives. Secondly, in the X-Men movie it is not the offspring of mutants who are talked about as having incredible powers. It is the offspring of non-mutants, which suggests incredible amounts of mutation on the earth for no particular reason. That said, it was a great movie and I pardon their gross innaccuracies.