The USNWR college ranking is for colleges, not graduate schools. The law, medicine, business, etc, schools have their own rankings. Berkeley does very well in those graduate school rankings (indeed, Berkeley and Stanford probably get the most top-3 USNWR placements of any school).
At the undergraduate level, however, the rankings measure something different. Essentially, they measure: 1) the test scores and grades of the incoming freshman class; 2) the reputation of the undergraduate program; 3) how much money (directly or indirectly) the school spends on undergraduates. As a big state school, Berkeley can't measure up in these categories.
Incidentally, I'm not sure the USNWR rankings are totally senseless in what they measure. For undergrad, I went to a big state research university with very highly ranked graduate engineering programs. For law school, I went to a private university whose undergraduate program was ranked in the top 20. While the two situations weren't directly comparable, I have to say that there is something to what USNWR measures. The experience of being a student at the big state MRU was terrible. Enormous freshman weed out classes, professors and TA's that didn't speak English, outdated facilities, etc. The experience at the private university was wonderful. Very supportive administrators, great facilities, approachable professors, etc. My law department was about the same size as my undergraduate major school, yet I got more personal attention from professors in my first semester of law school than my entire time in engineering school.
That said, attempts to game the rankings creates terrible incentives for universities. Pretty much the whole ranking boils down to how much money you can spend. You can buy high SAT's by spending more on scholarships, you can buy smaller class sizes by spending more on professors, etc. That works fine for well-established private schools with enormous endowments, but not so much for state MRU's. Berkeley's $3 billion endowment supports 35,000 students. Duke's $7-8 billion endowment (depending on how you count) supports 15,000 students.