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(re: What about new sequels?) I believe it all came down to corporate decisions. If a game didn’t sell (e.g. Phantasmagoria 2 and Torin’s Passage), or if it did sell well but didn’t fit into new corporate strategy (e.g. more Laura Bow and Conquests games), then a sequel didn’t get made.
Although, already by the early nineties Sierra seemed to be moving away from its adventure game company roots. During this diversification process, the focus shifted from producing adventure games to trying out many different products and genres. In my opinion, this decision was to some extent behind the slump in quality of Sierra products experienced in the mid nineties. (Because of a lack of focus on its core product / audience.)