You need an Oswalt, Santana, Peavy, Halladay, Carpenter, Pedro, etc. to anchor your staff. Hernandez is a good #3 guy, who if he has a sophomore slump, won't kill your staff. But if he lives up to the hype, then you have a great chance to win your league.
These managers taking him in the second/third round in 12 team leagues are crazy in my opinion. I'd wait until the late 5th, early 6th if at all possible. Definitely not my number one, would be worried if he was my #2, would be comfortable with him at the #3 spot or lower.