I think it wasn't a bad start for the Brazilians. Never be good in your first games. Top form before the Quarterfinals usually means you won't win it. But well, top form they might need for the very hard first KO-Match.
They can play better than this, quite a lot. But the Game did show that the Brazilians are overall limited in their approach. Plus I don't see that they can afford to loose Neymar, or a really bad game by him. I thought Oscar was very good today, but still. This is not the same as it used to be.
What they really have to deal with is their openes on the flanks. Give Robben any space like this and you just might be dead. But it's also due to their interesting way to defend, they do open up space in dagerous areas sometimes, even though you have to be good to target them. I think they'd have great problems because of this especially against Germany. But well, we don't know if they will play against each other.
Brazil and Argentina are mostly seen as favourites because everyone believes that no European team can win in South America, a theory that I think is ********.