Here's what JC has to say about it:Sam Worthington is already signed to play Jake Sully again and suggests "Jake should have abused his avatar and be fat and unfit and demand Neyteri to get him a beer."“I’ve had a storyline in mind from the start — there are even scenes in Avatar that I kept in because they lead to the sequel. It just makes sense to think of it as a two or three film arc, in terms of the business plan. The CG plants and trees and creatures and the musculo-skeletal rigging of the main characters — that all takes an enormous amount of time to create. It’d be a waste not to use it again.”
Meanwhile producer Jon Landau has this to say about a sequel:However there's still work on the other film JC was developing along side of AVATAR: Battle AngelIf the public likes Avatar, it’s a possibility. After all, here we are exploring the surface of the planet Pandora. The interior remains to be seen.