Best squad in the world is arguable, many people would argue that Messi is a choker, and that Pique and D.Alves are overrated, and that Xavi only passes sideways, and that Busquets is an average player, and Valdes is a horrible keeper.
Also, that squad got third place in the Liga, right behind the mighty Villareal, when Pep took over.
Not to mention being outplayed by United and not being able to score a single goal against them, and being beaten by Pool at the Camp Nou, the season before.
Xavi was never in the top 3 players before Pep, neither was Iniesta, Messi never got the best player award before him either. Pique was a nobody at United, he only got to play in meaningless CL matches, and Carling Cup games. Busquets and Pedro never played a single game for the first squad before Pep.
Its easy to attribute Pep's success to a having a good squad, but the difference in the individual performance of players, and the way Barcelona became more compact as a team, became one of the best teams if not the best team in the world in terms of retaining possession high up the field, and in terms of pressuring teams as a unit in their opposition half. Pep made a huge difference to Barcelona's play.
Whether or not he's been the best coach in the world in the past few years is probably debatable, one thing is for sure though, he has at the very least been one of the best coaches in Europe over the past few years.