Best team in the world =/= being the #1 team
Rankings reflect consistency, as long as your more consistent then the rest (even by the tiniest of margin) you'll be ranked higher, simple really. India's entire #1 was based on pretty much not losing, off the top of my head they lost a grand total of 3 games starting from the Aus series in 08 till just before the series against England started. How many points is 3 losses gonna cost? And whatever points we lost were recovered back by getting even in all 3 instances that we lost (SA 1-1, SL 1-1, SA again 1-1). Outside of that we drew/won games, most of our wins were usually 1-0's or 2-0's, so we weren't exactly obliterating other teams (although I partly blame that on some of our flat ass pitches we got in the SC). But we made sure we didn't lose. South Africa are in a similar situation (although we won more series then them, but that's probably because we played more test series then them in that period). SA haven't lost since early 09. Sure they haven't won much, but they haven't lost much either. So there ratings are just meandering within that 110-120 range. There's 2 ways they'll go up, either they starting winning more, or they wait till the teams ahead of them start losing more.
I still have England as the "best" team in terms of being really balanced and having pretty much all there bases covered (although they need to learn to play spin, and quick). But the best teams doesn't necessarily mean being #1.
Same goes for ODI's, Australia entered the WC as #1 ranked (and by some margin too). But who can honestly say they were the "best" team in the competition? Or even going into the competition? I sure didn't consider them the best team, and I don't consider them the best ODI team right now either. But they consistently won match after match, even if their team composition etc wasn't the greatest.