<<Actually, in F1 racing these days the understanding among the insiders is, 80% is setup &c alibration(suspension, gear ratio, tires, wings), 15% is engine power, and 5% is car design. Everybody have a damn good engine so engine is not a huge factor. The car/chassis design is mute also because everybodys got a small army of aerodynamicists. >>
Actually I must disagree quite a bit. Setup is essential- make no doubt about it, but the vast difference between the top teams and the smaller teams are aerodynamics. With the regulation changes over the last several years plus grooved tires, there has never been IMO a greater emphasis on aerodynamic grip vs mechanical grip.
I'll preface all of this by saying that there is a huge difference in tracks- from super high downforce Monaco to high speed Monza and Hockenheim. No single team is best on all types of tracks- obviously different cars will be better on different types of tracks.
Ferrari has 2 windtunnels I belive always testing 24 hrs day/365 days a year, looking for incremental gains on top of incremental gains that add up. McLaren probably has something similar. Smaller teams such as Minardi can't even begin to compete. Its not setup which is keeping them back- car design plus an engine that is 100hp down at least from the BMW powerplant is what's killing them.
As for engines- there is also a large difference between the haves and have nots. BMW, Ferrari, Ilmor are the big 3 and there is probably close to a 30 hp spread between them. The drop off to Ford and Honda is probably close to another 10-20 hp. Watching the BMWs rocket down the Hockenheim straights makes a strong case that a powerful engine will make up for quite a bit. By no means does Williams have a superior chassis to Ferrari or even McLaren, but they could rocket down the high-speed tracks at quite a dominating pace.
The wonderful thing about a powerful engine is you can run more wing, making up for the chassis deficencies, and simply power your way down the track a la Williams.
However the best engine(unless you have a massive advantage) will not make up for a poor chassis. Tracks at Hungary and Monaco will require that you have an excellent chassis where engine power is not nearly as important. Ferrari and Mclaren are clearly the class of the field at these tracks.
Lastly don't forget the driver- there is clearly a cut above when you talk about drivers such as M. Schumcher and Mika than Rubens and Coulthard.