My take on teams that can win it all:
1) Holland
2) Spain
3) Germany
4) Italy
5) Portugal
In that order. I don't think that Germany has the talent to beat either of the top 2 teams. To me, Spain has the talent advantage over ever other team in the tournament. Their lineup is pure class throughout (weakest player being Marchena, a DC). Cesc on the bench is simply indicative of Spain having too many good attacking midfielders. Xavi earned his starting spot in WC2006 and in qualifying for this tourney. Iniesta is well liked in Spain for sure, and is regarded as a fixture in the Spain lineup. Silva is the player I can see most easily swapped with Cesc, as their games are similar enough in style not to cause too many problems. Both are young and will be fighting over this spot for years I think. Senna is the old man of the bunch, and really the only holding/defensive midfielder in the group (and on the team). They need him as a counterbalance to the attack up front, as well as the puch up the flanks from Sergio Ramos.
Cesc isn't taking lightly in Spain, and the fans (and coaches) definitely saw what he did in the EPL this season. He hasn't quite proven his stripes though in "la roja" just yet, but I can see him getting plenty of playing time (and possibly a start this next round) as a result of his play in the first game. He's obviously got tons of talent.
The following players are all 22 or under: Torres, Villa, Cesc, Silva, Xavi, Sergio Ramos. That's a core group of up and comers for Spain. They need one defensive midfielder and a handful of center backs / defensive wingers and they have their team for the next 6 years I think.
Personally, I think that Cesc should be starting over Silva, and maybe over Iniesta as well, but that's my take.
Final Spain news: Torres was upset at being taken out (after they were already up big) and refused to shake the hand of Aragonés as he was coming off the field. The drama and infighting have already begun... I think Aragonés is a stubborn ###, and may not view that action highly. You might see Güiza with some PT, or maybe going with 5 MFs.