This is a good question. The obvious answer has to be Australia, at least for now. England took the Ashes back this year: this was a great effort and Australian cricket fans are no doubt still asking how exactly that happened, but it was a feat of courage and luck. To be honest, Australia were mugged.
England were slaughtered last time they toured Australia. They have for years be guilty of not being mentally prepared, of thinking they are just going to turn up and play some cricket. The story will replay in 2010-2011 if they are not careful. Australia will still have Ricky Ponting, one of the best batsmen I have ever seen, and they have really fine players coming up. Their most serious problem is finding a regular test-class spinner to replace Shane Warne but Nathan Hauritz impressed me both as a practitioner and as a typical Australian player, full of fight, when I watched him in the 2009 Ashes series. The decision not to play him in the final test may well be the reason why Australia lost that game and lost the Ashes. I think Australia are rebuilding very intelligently wheras England are treading water and likely to tour Australia next winter with a side which is actually weaker than the side which flew to South Africa last November.
Best side in the world: Australia, every day of the week. But England would worry them quite a lot more if the ECB didn't have such an elbow-posterior differentiation problem.