It did take a lot of the focus off of the tight Travel -> Investigate -> Assassinate -> Escape loop of the first game, but that's actually a good thing, in my book. The first game's formula was really obvious, and deviating from the formula's path always felt pointless. Certainly the sidequests like collecting banners were painfully awful.

In AC2, there's a lot to do, and a lot of those sidequests are actually fun and interesting - but if you'd rather focus on the core story, you can ignore it all. And the core story's missions are far less formulaic. The downside is that some of them feel a little bit fluffy, especially a lot of tutorial style minor quests in the beginning. It gets a lot better.

The storytelling in general - both the Desmond scenes and the Ezio scenes - vastly improved over the first game, too.