Undertale is an extremely good game and blew away my expectations. It's also very obvious that it was made by one or two people, music and art included, because of how well everything meshes together. Definitely not too many cooks in the kitchen on this one.
As for a sequel, I don't know if it really needs a direct sequel, but something in the same style or set in the same world (Overtale?) would be nice. There's also the possibility of patching in/adding DLC for W.D. Gaster stuff, maybe in the form of another, very weird ending. The stuff that's already in there is just ambiguous enough to feel like a teaser.