Tourney performance isn't all that counts when evaluating a program, but it's the most important. This year was a failure in that regard, but I consider the season successful because the benchmark for that IMO is making the NCAA's.
I don't totally understand your second sentence. Are you saying ISU got smoked in the tourney, but ISU fans are claiming they are still better than Iowa? To be honest I don't think it's a very meaningful argument at this point.
Both teams flamed out in the tourney, Iowa won the head to head matchup, ISU finished better in the metrics, and both teams graduate a whole lot of production and leadership and are going to have some pretty major holes to fill in the transfer portal.
ISU is kind of exactly who I thought they were, a good team with a very low floor if they aren't making shots.