Yes, Rosemary's Baby totally works that way too--is she crazy? Are they crazy? The movie's really more about paranoia than the devil. In fact when the baby's born it's almost like the end of a bad joke--wait, he's got yellow eyes and horns? That's...cute?

I also agree on stand-alone sequels, because they're not always bad. Actually one series I would say really works that way are the Planet of the Apes movies because each one really has a different idea. None of them just re-hash the one before.