He's only a 'CM' in Barca's lop-sided 433. He's not a central midfielder.
He absolutely is. Did you watch today? He spent half the game level with the CBs, and was incredibly disciplined in terms of not giving in to temptation and joining in with attacks too often. It was a textbook deep-lying playmaker performance.
EDIT: Despite the fact that Isco is stealing all the headlines, they're still equal for me. Thiago plays in a position (and, at Barca, in a system) where it is not quite so easy to shine. Tonight, for example, Thiago looked just as many lightyears ahead of everyone else as Isco, but he was clearly being very disciplined and efficient. In the last five minutes, he was suddenly in AM asking for the ball constantly, I think because the match was clearly won and having been unselfish all game, he wanted to join in with the fun in attack. It was noticeable because he'd so obviously been holding his position whilst others burst forwards for most of the match.
Isco is already one of the best dribblers in the world. If he had pace, I'd say he could be a future Messi. But Thiago is a more complete footballer. He's less easily muscled off the ball, he's got a simply ridiculous range of passing, which he showcased today a few times, and he has that ability to run games from a deep position normally seen in older CMs.
So like I say, taking Isco's age into account they're equal, for me. But obviously factor Thiago's cheap price and perfect fit for our needs into the equation and he's comfortably the better player for us to go for. That said, get both and I reckon we become strong CL contenders.