In the in-game storyline, level > moveset. Or, at least, when I was little I know my movesets were dreadful messes, but with even a slight level advantage it didn't really matter. The Pokemon games really aren't designed to be that difficult or strategic. You can plow through them on raw power and do just fine.
In competitive or online play, or the Battle Tower / Frontier / Subway, level is obsolete. Most typical wifi battles equalize the levels of all Pokemon, to ensure there is no level advantage. It's all based on stats and moveset strategies.
Over all though, when level difference is a factor, level is probably almost always going to be more important? I mean, when it's just a difference of three or four levels it's no big deal, but higher level Pokemon have higher stats, and a solid moveset is worthless without the stats to back it up.