A couple of weeks back, I started reading Deadline  by Mira Grant. It's the sequel to Feed , which I read when it was on the Hugo ballot last year, and liked well enough. Deadline is on the Hugo ballot this year; that's why I picked it up.
A quarter of the way through, roughly 130 pages, I made the difficult decision to stop reading. As far as I can remember, this is the first time I've ever given up on a book part way through. I didn't stop because Deadline was bad. I stopped because I felt like I'd read it before, when I read Feed.
The plot was somewhat different (a logical extension of the first novel, as befits a proper sequel), and the characters had been shuffled around, but for all intents and purposes it was the same thing again: a gritty zombie conspiracy thriller. Which is fine if that sort of thing really excites you, or if you developed a particular attachment to the characters from the first novel. I didn't particularly, and so it ultimately didn't seem worth my while to keep reading.
That got me thinking about sequels in general, and specifically sequels on award ballots. Honestly, sequels on award ballots annoy me. For a start, they're rarely readable in isolation -- you couldn't possibly read A Dance With Dragons  by George R. R. Martin without having read the previous four books in the series. Even if you could you probably wouldn't want to; much of the enjoyment of a sequel is in seeing how the story continues, or what happens to characters you love.
My second issue with sequels on awards ballots is more a matter of personal taste. I think a big part of my enjoyment reading science fiction and fantasy comes from a sense of discovery. I want to be surprised by an author's ideas, and I have lots of fun figuring new things out. I feel like a lot of that creative heavy lifting, with setting and concept and often character, occurs in the first novel in a series.
Which isn't to say that I dislike sequels. This last year I've read two series that I've really enjoyed: Elizabeth Bear's Jacob's Ladder series, and N. K. Jemisin's The Inheritance Trilogy. But I think I can honestly say that in each case, the first book in the series was the best.
There's one exception to this rule, and that's the sequel that utilises a familiar setting, but a completely new set of characters and situations. China Mieville's Bas-Lag novels fit the bill (I liked the second, The Scar , best). So do (most of) Alastair Reynolds' Revelation Space novels (Chasm City  is my pick, the second in the series). Also Iain M. Banks' Culture novels (I'd probably go with Use of Weapons , the third Culture novel).
I'm not going to go so far as to suggest that no sequel (of the continuing-story kind) should ever be eligible for an award. But I am going to contend that there has to be something really special going on for it to appear on a ballot. For me, sequels have an extra hurdle to overcome before I consider them worthy of award nominations. It's not enough that I love the series, or that I enjoyed the previous novels in it. It has to truly, honestly stand on its own.