Diablo 2 was far better for online play. I actually liked the original Diablo better for single player, though.
To put it in perspective, the original Diablo had a bug that could easily be exploited to duplicate items (obviously ruins "fair" online play). Combine that with dozens (if not hundreds) of easy dupe, God mode, anti-God mode, level 99 spells, etc. programs and it's pretty easy to see why Diablo 1 multiplayer is pointless, unless you're strictly playing with friends. Programs aside, I don't believe they ever fixed the original duplication exploit.
Diablo 2 is far from unexploitable, but it was definitely a step in the right direction (Closed Realms). It also had quite a bit more content, and was just tuned much better for party play styles (more boss battles, monsters scaled up in toughness with more players in the game, more classes, etc.).