In any draft pick, the game emulates real-world drafts, where one does not know how a draft pick will actually pan out in the season.  A coach always deals with a bit of uncertainty when signing new players.

Having a #1 draft pick does increase the chances of getting a good player - you won't get any one or two star players in a #1 pick - but just as in the pros, you may wind up with a three, four or five star players.   

When you have a first-round pick, your chances are less certain of getting a highly-rated player.  You can acquire anyone from a two to a five star player.

Each round thereafter (2nd, etc) will have a lesser probability of landing a highly valuable team member.

Star rating ranges for different draft picks:

Specialty 5 Star Draft: guaranteed 5-star*
#1 Pick: 3 to 5 stars
1st round pick: 2 to 5 stars
2nd round pick: 1.5 to 4 stars
Late round pick: 1 to 3 stars

*The 5-star specialty draft is usually given as a Club Reward, but is occasionally available as a limited offer to purchase where you purchase gold.