I think there will be a Paranormal Activity 4. I think there will be as many as they can make, until people get tired of them. With the PA films being made so cheaply they don't have to make a lot at the box office to be hits, and the first two raked in massive bucks.
I can't really answer your question because there's a hole in the story for me since I didn't see #2. I wasn't even sure at first that they were supposed to connected, but I found that out early in the film that the film is connected. When I was walking out, I overheard a woman saying that the third film is actually a prequel, but I don't know if that's true or not, though it probably was. To be honest, I wasn't that much into the first one where I remembered the characters names, so I don't know really know the extent of how much the first and third films are connected.