It's all about the bowling really, isn't it? Although Trescothick and Strauss have lost form, Vaughan has come back in after an extended absence through injury, and Cook has come to the fore.
Your middle order is by no means poor, though I'd prefer to see Bell at no higher than 4 under any circumstances. It's also time now for him to really start stamping a name for himself as a senior test-class batsman. In form, if you had Strauss, Cook, Vaughan, Bell, Pietersen and Collingwood as your top 6 it would be a pretty good line up. Then Prior and Flintoff (sorry, I just dont think he's a test-class number 6 -has to be 7 or lower) to round out your top eight. Monty plays as spinner, leaving Hoggard and one other for the pace bowling spot.
So much depends on Flintoff. You CAN get by with 4 front line bowlers (Flintoff as one) if he is fit and firing. Then you have Collingwood and Pietersen with the part-time medium and off spin stuff that Symonds has done for Australia. By batting Flintoff at 7 or 8 you lessen his requirements to perform like a genuine test batsman and allow him to concertrate more on his bowling. Imo his bowling is more consistently match-winning for you than his batting will be, because of the nature of his batting game. He's hardly Kallis-like technically and will always be a bit and miss.
For the last fast bowling spot, well it's a quandry isn't it? Assume Flintoff and Hoggard as your new ball bowlers, you can take Sidebottom in as the third seamer (I must say he's proven better than I thought he would be, but I'm still hoping like hell that he plays the next Ashes series) when conditions mandate two swing bowlers, or you can run with a third seamer who offer more pace/ bounce when conditions warrant it - say a Harmison or someone of his type - tall and bouncy.
I guess what all this highlights is just how important Flintoff is. Of course, Simon Jones would be a wonderful asset, assuming he can bowl like he did in 05 again. There's got to be a big question mark on that though, so really, to me it's all about Fred. Without him the side needs some serious re-jigging in order to reach the right balance.
To me, it's his absence and limited output which is really inhibiting the side.