Well, Gil beat me to the punch on Baldur's Gate: Dark Alliance which is my favorite 2 player cooperative game in recent memory.
If you want to pound on your friends, I'd look for racing games like GT3, Wipeout (weapon based hover racing), and SSX (amongst others)
Fighting games are good too, Tekken tag (Tekken 4 is coming soon), Virtua Fighter 4 (very deep, not for everyone), Capcom Vs. SNK 2, or Bloody Roar 3 (ver accesible, a little to easy to play, but entertaining)
Twisted Metal Black is also a good choice as well (Vehicular Combat at it's best)
As for games Similar to Halo, there is Half-life, Timesplitters, and Red Faction. (None are as good as Halo, but they are the best there is on the PS2.)