Time has passed. GSP walked into one huge punch years ago, and was quickly KOed because of it. It was so long ago that GSP won the rematch (by dominant stoppage) the same week
that current top-3 p4per Jon Jones made his pro debut.
Sonnen dropped him with strikes at least once in the first match. He didn't badly hurt him, but he floored
Anderson won both fights against Chael, but he lost 5 rounds out of 7 during them. Has GSP lost 5 completed rounds in his UFC career, let alone lost them in such one-sided fashion as Anderson did against Chael?
First, I agree that Diaz is not the #1 contender. But he is a longtime top-level guy.
Second, wins over Condit and Diaz are better than no fights against MW contenders in the same time period. Anderson last defended his belt in July, and he has no title defence signed yet and no indication that one is coming any time soon.
All that said, I have Anderson #1 p4p as well. But p4p is current - overall career legacy is only part
of it. That's why Hendo isn't a current top-5 p4per. And as of December 2012, GSP is defending his belt more often in a deeper division. There's a good argument to be made that GSP is #1 anyway, but if he beats Diaz while Anderson celebrates a year without defending his belt, his case only gets stronger.