Well, every NFL team is better than Penn State, but you want to know a college team better than Penn State? Well, there is none. Florida may be a close second, and so could Texas Tech.
You're underestimating Penn State thanks to the weak perception that the Big 10 acquired thanks to Ohio State laying an egg in back to back BCS championships. Here's a list of reasons why Penn State is not Ohio State.
1. Penn State has a much better bowl record, and a winning record against every conference in bowl games.
2. Ohio State struggled with many opponents the last couple years, Penn State's blown out almost everyone.
3. Penn State beat Ohio State. Yes, I know by seven in the Horseshoe, but guess what? Texas, the best team of 2005, only won there by three measely points. They won 25-22 but went on to win the Rose Bowl against USC. Also, the mighty SEC is 0-3 there.
4. Penn State beat Oregon State 45-14 and had the backups in for the second half. Oregon State beat USC. I know Ohio State lost to USC 35-3, but remember that Wells was injured, the QB situation was messy, a key lineman out, and it was at 11 PM. Imagine if USC played a noon game at Ohio Stadium with one of their best linemen injured, a crappy backup QB, their best RB injured, and I guarantee it'd have been a much different game.
5. Some of the teams that these SEC and Big 12 teams beat aren't really that great. Especially out of conference. I mean, come on, Chattanooga? North Texas? Those aren't exactly formidible opponents.
6. Penn State has scored an average of 42 points a game, and allowed an average of 11, some of those games have been against inferior competition, but Illinois gave Missouri fits (who gave Texas a decent game), Wisconsin isn't as terrible as they look, Oregon State is good for a Pac-10 team, and Ohio State is a much better team than their recent reputation has gotten them.
7. Penn State does not lay an egg in bowl games. This is driving home another message, but it needs to be mentioned. Penn State has won their last three bowl games, one was against ACC champ Florida State in the Orange Bowl. Penn State has only lost two bowls since joining the Big 10, and one was because the key RB and WR were suspented. Penn State also has a perfect Fiesta Bowl record.
8. Penn State has the ability to adjust to whatever a team throws at them. We saw this with their past couple games. They erased an opponent's halftime lead and turned a close game into a rout. They forced a key fumble from another that won them the game. They held a runningback to 55 yards on 22 carries that ran all over the LSU defense last year.
Penn State is not Ohio State. I'm glad people recognize that this isn't last year's dismal 8-4 (4-4) Alamo Bowl team, but 2006-2007 Ohio State is not the pinnacle of Big 10 teams. That would be 1994 Penn State (who got screwed by the polls).