San Jose drafts very well, and develops players well too. In their history, only Teemu Riihijarvi stands out as a 1st round pick never to make the NHL. There were also some poor high 1st rounders (Falloon, Zyuzin, and Jillson stand out), but look at the record the rest of the way:
Michalek, Bernier, Goc, Ehrhoff, Clowe, Schaefer, Dimitrakos, Stuart, Cheechoo, Davison, Marleau, Hannan, Smith, Sturm, Toskala, Fahey and Nabokov are all Sharks draft picks who have suited up this season.
Meanwhile, Ray Whitney, Sandis Ozolinsh, Mike Rathje, Viktor Kozlov, Shean Donovan, Jeff Friesen, Vaclav Varada, Miikka Kiprusoff, and Mikael Samuelsson are all on NHL clubs this year. You can add Zyuzin to this list if you overlook the fact that he was a 2nd overall pick and isn't doing great considering his draft position.
Toss in Ragnarsson and Korolyuk, and things look pretty good on the NHL front.
And the Sharks system isn't exactly in shambles either.