I don't think we've seen a team that look like they could sweep all before them yet. Sure, that sometimes means nothing in this competition (see Liverpool 04-05, Porto 03-04) but what I mean in this case is a team who are showing consistent form in the group stages so far. Compare Barca's group stage results last year with what they're like this time around: in 05-06 they won all their group stage games, only drawing one away in Greece. They scored 16 goals and let in only 3. This time they're struggling to qualify. But more on that later.
Take a look at the usual suspects. While Arsenal should be contenders because of the quality of their squad and how well they can play, they still have trouble finding their way through a well-organised defence, as their domestic form and both results against CSKA have shown. It will be interesting to see what Porto can make of them second time round. Manchester United? They just got beaten by Copenhagen. Yeah, it wasn't a full-strength side, but that illustrates their problem. I think it's probably better for Sir Alex to focus on winning the domestic battle rather than obsessing about another European victory - his squad's far too thin for both, especially considering the ridiculous amount of games in the English calender (2 domestic cups? what?) Injuries to a couple of players would damage the ability of his squad severely.
Liverpool can never be discounted. Rafa Benitez is very, very good at winning cup competitions, as his record shows. Contrast their domestic form with their CL form. At their best, they don't let anything through in defence and break decisively in attack. It might not be the type of football I like to watch, but it works very well. That said, you do get the sense that they could struggle a bit because of the amount of ground they need to make up domestically to even get near Chelsea and Manchester United at this point. Still, they look the most likely of the English clubs to challenge, with one exception I'll discuss at the end.
Moving on to Italy, I think a lot of people were discounting the Italian teams at the beginning for various reasons related to the match-fixing scandal. But they are notoriously good at cup competitions. Roma don't look like winners, frankly. Their squad is too small and lacking in quality to sustain compaigns on both fronts, especially since their fans want to have a go at winning Serie A this season.
Inter on the other hand do have a big enough squad, but they're also notoriously liable to fall apart in the later stages of big competitions. I watched them play very well in their win over Milan, but got the sense that a well-organised defence (which Milan's wasn't, I can assure you) could stop them. Crespo's a great forward, and Cruz is producing the goods as usual, but Ibrahimovic isn't the most consistent striker in the world and Adriano is next to useless at this point. They're fairly solid at the back, which is very useful in cup competitions, but somehow still fail to convince me that they have the will to go all the way. Opposing arguments are welcome - I'd love to see good old Zanetti lift Big Cup if my team can't.
Just like Liverpool, Milan can never been discounted, even when they seem to be a bit down domestically. They lack a forward who guarantees goals because they let their best go to Chelsea and didn't replace him. That's going to be a big problem when the going gets tough. Kaka can't hit hattricks in every game. And then there's the defence. I get that most of these guys are legends, and Maldini still looked great when he came on in the Milan derby, but I don't understand how the club could have allowed their backline to become such a collection of monuments without bringing in young talent.
Can't Evil Overlord Berlusconi splash out some money to pluck promising young defenders out of the smaller European leagues to learn under the greats? Costacurta is over 40, you know, and 32' Television Set Cafu (nickname courtesy of the Guardian) isn't getting any younger. Even Nesta hasn't been on form this season after suffering injuries before the World Cup. Anyway, they've got some problems both up front and in the back. I don't see them going all the way, unless of course the draw favours them ridiculously, as happened in the group stages.
I wrote a while ago about how Valencia are the only ones who look like potential winners of the Spanish big three. It looks even worse for those of us who love La Liga now. Real are looking better under Capello, who after all is very experienced with winning cup competitions, but I think they still have some issues to sort out at the back. The real test will be what Lyon can do at the Bernabeu. Real are capable of winning games even if they don't play particularly well, which is a plus in the CL, but right now they are very much reliant on the form of a few players up front (Van Nistelrooy most importantly, and Robinho). Injuries could be a problem as the season drags on because of that. They also need to fight on at least 2 fronts.
Capello's choices so far seems like an indication that he's not taking the Copa del Rey seriously, but that still leaves the league, where Barca aren't going to take anything lying down and a whole host of clubs are nipping at their heels. In conclusion, they haven't really put in a performance to convince me yet (keeping in mind I am the type of person who criticized the Barca midfield after we won 5-0), although there are some good signs.
Valencia are a tricky bunch. I thought they'd be proper contenders at the beginning of the season, both in Europe and at home. Their squad is huge, brimming with talent, and they are a very well organised team. They have 2 brilliant strikers in Villa and Morientes who can't stop scoring, great wingers, a balanced midfield, and a solid backline led by the formidable Roberto Ayala. But their luck with injuries has been absolutely rotten. Half the first choice XI is injured. They've lost their wingers, pretty much all the midfielders and a whole lot of defenders as well. If this injury problem isn't sorted out soon, they can forget about challenging for the league.
Happily they've already qualified for the knockout stages of the CL, so they can focus on getting a complete squad back together in time for those fixtures. If they can manage that then perhaps they will go far. I'm not convinced by the consistency level of Quique Sanchez Flores' team, though. They always seem to crumble at key moments - see their attempts to keep up with Barca in the last 2 seasons, one of which resulted in them being overtaken by Real Madrid near the end and the other just as unsuccessful. By losing to Celta and Racing successively they seem to be showing similar symptoms this time round. That's something they'll have to fix. The CL is unforgiving to teams who fall apart under pressure.
Now we come to the defending champions. Like I pointed out at the beginning, not the best start this time compared to their barnstorming group stage run last season. Admittedly we have a harder group this time, but that shouldn't be an excuse for a team with title winning aspirations. Before even talking about Barca's chances of winning, they have to get out of the group stage, which in itself is going to be very difficult. They need to beat Levski away and then Bremen at home. Bremen in particular are on fire at the moment. Like Deco said, Barca will need to battle to the death at Camp Nou to win on the last matchday.
Assuming we do scramble out of our group somehow even with no strikers (one crocked, one half-crocked, the rest aren't actual strikers), a lot will depend on when Samuel Eto'o gets back, and what kind of form he's in. I believe based on the Chelsea game that Barca as a whole are finally finding some form, but the striker position is still our crucial weakness.
Moving away from the big 3 leagues and on to other contenders. Lyon are arguably the most in-form team in the CL right now. Their problem seems to be falling apart at the later stages. It will remain to be seen whether or not they can change that this time round. One massive advantage is their formidable lead domestically - they really don't have to work too hard to win the title, which will leave more resources for challenging in Europe. I'll reserve judgement on them until they play Real again.
Bayern Munich started this season by declaring that they'd be happy to be in the knockout stages. They've got great results in the group stage, but I'm not convinced they have what it takes to go too much further. Poldoski hasn't settled in; Mark van Bommel, while a good player, is no Ballack; they look shaky at the back and have a tricky domestic campaign this year with Bremen looking stronger. All in all, I don't see what's going to take them far.
Speaking of Werder Bremen, they would have a fair shot of getting past the round of 16 if they managed to qualify. Now, given my allegiances and the situation in the group I have to hope that Barca get through instead, but if it does happen (to much wailing and gashing of teeth on my part) at least Bremen are a positive, attacking team. To qualify they have to get a result at home against Chelsea and then away to Barcelona. Given their recent domestic form that looks very possible, although last season they arrived in the Camp Nou on the back of similar barnstorming domestic feats and were well beaten.
That said, they have improved from last season. Klose is as deadly as ever, especially with young strike partner Aaron Hunt helping out up front. Frings is as good as ever, and even their much-mocked defence is improving with the impressive Naldo and new signing Mertesacker impressing in particular. When on form, they can trouble the defence of any team. I'm stuck hoping that they don't qualify, which is not a nice position to be in because they play lovely football. Still, how insane is group A? The league leaders of England, Spain and Germany battling it out for 2 places.
PSV have looked pretty good at times this season, and they're always contenders, but I'm not sure how genuine their challenge will prove to be in the later stages. Same goes with Porto, if they manage to get through the group stages. I think one of the dark horses this time around could come from their group, namely CSKA Moscow. Their defence is notoriously wall-like and they've got quite a few skillful Brazilians up front, not to mention an exciting homegrown winger. A Villarreal-like run? Maybe. They've got the necessary qualities.
All of which brings me to the team who look most like winners right now. That's Chelsea. They have a big squad, no matter what Mourinho insists, full of quality players. They have a healthy mix of experience and young talent. They have a manager who knows how to win in this competition. Their only weakness as far as I can see is vulnerability along the wings, but hardly any teams use the wings properly these days. Lyon might give them a hard time, but otherwise they have the potential to beat anyone else, and they know it. Of course, whether or not that attitude will prove to be a stumbling block depends on how well Mourinho can regulate his team's mental state, and he can do that very well indeed. Unless they meet nemesis Liverpool again, or an on-form Barca with Samuel Eto'o back, I don't think too many teams stand a chance against them.