I feel both Australia and India are better than Sri Lanka. Sri Lanka are tough to beat at home but we (India) lost the last series to them largely due to the Mendis mystery. This year's series in India will decide who's better (although we got to beat them in their den too). SA is comfortably the best by some distance. India needs Zaheer back. Ishant should continue his test form, we might need Sreesanth back to prop up the pace attack and not rely on 'in and out' guys like RP Singh, Irfan, Nehra, etc.
Tendulkar and Dravid might not retire until 2011 (maybe even more). Laxman should be in for more than that (he is in a golden run right now for Lancashire). With guys like Badri, Pujara, Rahane and Kohli waiting, we should withstand the major retirements better.