There are basically two schools of thought here (with lots of middle ground in between):
One says to always draft the best player based on the stats you expect that player to produce. A home run, so the reasoning goes, is a home run, no matter whether your outfielder or your catcher hits it.
The other way of thinking is that the idea, after all, is to beat your opponents. If your catcher hits 20 hr more than the other team's backstop, and your of hits 10 hr less than his of, it doesn't matter that his of takes home the mvp award: you'll still win the league.
I'm a huge believer in this second way of drafting. In my book, A-Rod should be taken ahead of Vlad, even if Vlad's total numbers will be somewhat better. The trick is to figure out when in the draft you can get an advantage by following positional scarcity...
I'm sure that those who always look for the best available player will have a word or two to say here as well, but that's the fun part: everybody has their own unique strategies.
Check out the mock draft forum for an example of how a draft can develop. You'll see quite a few different styles there.
And oh yes: A-Rod before Schilling.