From what I understand there was (or is still maybe) a CH2 in development, but Sega too a big hit on this game. Probably from the fact that they released it rather early in the 360's lifetime. I love this game also, but Sega couldn't/can't find anyone to either develop or publish the game, I forget which.
Honestly, I think we should petition for the release of a sequel. This game is why I bought my 360.