That's right, the binary morality system is intact from the first Infamous, but Sucker Punch did a great job refining it. Good and Evil powers are more balanced so that you don't feel like you are hamstringing Cole by picking one side or the other. There are a few branching missions but the choice between Good or Evil doesn't feel obvious like "Save this boy" or "Burn these kittens alive." I also loved how just screwing around in the city can be a form of roleplaying. You gain blue XP from doing good acts like healing people and red XP from dastardly deeds, but it's easy to switch if that's your inclination because of the many random events peppered around the city. Kill off a few policemen, and you get a little more evil. Stop that mugging and the people will love you a little more.
Of course, what's the point of a sandbox if you can't knock over a few castles? Once you unlock the awesome Kinetic Pulse power, you can lift up cars and other objects and lob them fantastic distances. And if the resulting explosion kills a few citizens and nets you evil XP, that's just a bonus, right? Maybe I'm just a jerk, but I had fun beating up the bucket drummers and those stupid people who paint themselves gold and stand on boxes. I'm glad that Infamous 2 let me act out in a way that I never would in real life, and even rewarded me for it.
The good and evil spectrum is symbolized by your relationship with two NPCs: fiery New Marais native Nix and an ex-NSA agent Lucy Kuo. At first, Nix is all about exercising her powers, while Kuo is more compassionate, but both their characters develop in ways you might not expect. The final acts of these two feel a bit out of place, though, as if it was written for shock value rather than a natural character progression.
It's hard to achieve a satisfying conclusion to a story that essentially has two different protagonists, depending on whether Cole is evil or good, but Sucker Punch made a valiant effort. One specific cutscene starring Cole and Zeke has almost no dialogue but clearly demonstrates their friendship, and it works really well no matter which direction your character is leaning. But these moments are few. Without spoiling anything, there is some drama in the closing scenes, but neither side of the tale resonated with me like other games have.
The endings for good or evil tell two very different stories, but again you are not forced into making one decision or another. If the final choice open to you due to your karma level is not to your liking, you are given the option to go back into the world and earn the XP needed to switch your morality. That in a nutshell proves the designers listened to critics of the first game and delivered excellent combat mechanics in a beautiful open world, with an engaging morality system that doesn't feel like it punishes the players for making choices. Now if only Sucker Punch can figure out how to provide a narrative that matches the mechanics.
Bottom Line: Infamous 2 improves upon the original in nearly every way with a fantastic setting and great mechanics but the story just wasn't quite a home run.
Recommendation: Definitely worth a buy, if only to skate around New Marais and toss some cars. And shoot guys with lightning. And beat up bucket drummers.