I actually loved everything about last night's episode--I didn't think the Sylar stuff was a letdown at all. He was very creepy, long before his powers showed up, and the idea that he doesn't have any powers at all if he doesn't kill people and eat their brains is pretty cool. It enhanced his spooky serial killer vibe, which I admit I'm partial to.
What was awesome about that episode, though, was everyone else's stories. We got stunningly perfect explanations for so many things:
Nathan hates flying because he blames it for his wife's accident. That made Nathan seem a lot more human, and made his "flying is stupid" attitude actually make sense.
Hiro told Peter to save the cheerleader because he couldn't do it himself, because he can't change the past directly. It's always bugged me that a cool dude with a sword who could travel through time didn't just pop into the past and save Claire; now we know why. Also, Charlie was an awesome character and her relationship with Hiro will certainly have a big impact on him. He's sat by twice so far while people were killed, without doing anything, and I don't think that will happen again.
Niki had a split personality long before her power showed up. I can't think of a better explanation for Jessica than the "dead sister and abusive father" angle they revealed last night. It doesn't make sense that a mutant superpower would involve a second personality (that was one of the big reasons I didn't like the character), but if the personality was already there due to prior trauma, it makes perfect sense that it would trigger when she Hulks out. That the second personality is abused, jaded, and violent makes the whole thing work really well. I was quite pleased.
On top of those explanations, we learned lots of other things: that Mr. Bennet has been dealing with superheroes long before Suresh; a little more about Eden's past (and that she looks twenty times better with long hair); a little more about the cop (who's name I still don't know: Matt?), and we've seen a second oracular dream by Peter. That's still at "coincidence" level, but it could develop into something interesting.
As for Sylar, I'm really surprised that you didn't like his backstory. What were you expecting?