I completely understand why they would take the sequel to Arkham Asylum in the sandbox direction, and it is definitely pretty cool. What I'm concerned about is the cost it had on the storytelling end. For instance, well, you'll have to tell me if it has what I'm looking for:

*Arkham Asylum Spoilers*

The pinnacle of Asylum for me was when you're walking down that hallway after Scarecrow starts working his magic and it slowly turns into the alley where Bruce's parents died. Not only that moment, but all of the creative horror-y and bizarre Scarecrow sequences were incredibly well done.

*End spoilers*

Arkham City seems to be lacking in that sort of creativity that I found so refreshing. The action is all there, and it's definitely seen some worthwhile improvements, but Asylum had more than that going on for it, and I loved it.

Yeah, the Scarecrow sections were pretty brilliant. Asylum probably was stronger story-wise, but I'd say City is more fun. Also, City's ending was surprisingly gutsy.

Being sandbox style I found a lot of what you are describing in side quests, you can "gobble" a quest up all at once (something like the Mad Hatter side quest) or maybe more in chunks like Dial Z for Murder. Of course, the overarching Nemesis in Arkham City is more The Riddler, he's there, during the whole thing, if one person controls everything going on in the City he does, everyone else there simply thinks they do or is actively fighting the others for a bigger piece of the pie.