Just resetting the sequence and updating all rows may cause duplicate id errors. In many cases you have to update all rows twice. First with higher ids to avoid the duplicates, then with the ids you actually want.
Please avoid to add a fixed amount to all ids (as recommended in other comments). What happens if you have more rows than this fixed amount? Assuming the next value of the sequence is higher than all the ids of the existing rows (you just want to fill the gaps), i would do it like:
UPDATE table SET id = DEFAULT;
ALTER SEQUENCE seq RESTART;
UPDATE table SET id = DEFAULT;