Its that # 1 money that sucks. That's why the suckie teams stay suckie and the good ones stay competitive..........They manage the Cap way better picking value at a much more friendly Cap Number.
It's not that I disagree with you about the "#1 money sucks", but if you can manage to get a star player, the money is actually quite well spent.
In the end, I think sucky teams stay sucky for reasons other than being "stuck" with the #1 pick.
If you look at recent #1s, the Bungals did quite well after grabbing Palmer at #1. From the worst team in football in 2002, they went 8-8 in 2003 (in a very weak division), 8-8 in 2004 (in a much stronger division), 11-5 in 2005 (and then it went downhill again, but the team is still in good shape). And this from a franchise that has historically been quite adept at sucking.
The Chargers in 2004 have done quite well as well, although I guess you really should count that #1 as the Giants, since they're the ones who had to foot the bill (and got the player). In any event, that's one heck of a team today. One won the Super Bowl, the other has been (and is) among the favorites to win ever since.
The Texans, who picked Mario Williams (over Reggie Bush) in 2006, are also a team on the rise. From the worst team in football in 2005, they went 8-8 in 2006 and again in 2007. Whether or not they make something of it, they are clearly a decent team - and, let's admit it, they're not exactly stuck in the easiest division in the league... (I would argue it's the strongest).
That pretty much leaves the 49ers of the most recent teams (rookie contracts are typically on the order of 5 years, so the "damage" should be the most significant over that period, probably even less), since it's too early to tell what the Raiders will do.
Suffice to say, I don't think you can blame the JaMarcus Russell pick on the Raiders sucking, if they indeed continue to do so. And even though Alex Smith doesn't seem like much of a #1 pick, that's hardly to blame for the 49ers consistently being stuck in the mud. At least, it's not nearly the only reason...