It's not common a game changes genre entirely and it improves entirely on all major fronts while retaining the interesting mechanics of it's predecessor. The switch to a mostly low-poly 3D style benefits it's art-style and more than that it takes advantage of the shmup/STG format immensely and frequently, plenty of switches of perspective for effect. You also get to have more fun with the tools you get, having less but more significant tools you can upgrade more easily.

As for it's issue the main one it's readability of what can harm you or not has not been improved much from the original but mainly it's a balance issue, one of the first mandatory unlockable weapons (Brigner of Mayhem) is easily the best weapon in the game, allowing to kill everything on the screen with little on the way of putting yourself in danger making the game far more banal.

As a shump/STG it probably loses to it's competion even having not really played anything else in the genre but a sequel to Valfaris is almost a complete improvement, worth a try over the original if you didn't like that one much.