I normally outrank my competition quite easily but from time to time I see some sites out rank me. And when I check these sites out I can see that they have spammy backlinks and re-hashed/spun content. It feels great to know that the next Google update will tank these sites HARD.
So if you see crappy websites outranking you don't worry. Keep doing all the techniques you know work and wait for Google to clear out the garbage.
Note - after a major Google update I see 100s of forum posts moaning about sites being Sandboxed or de-indexed/lose its ranking. Think about it from Google's perspective. If people stopped using spammy/Blackhat method, Google wouldn't have to update!
It's easy to seduce Google if you follow the guidelines...