During the 1930s, the Red Army Air Force - VVS - was considered to be very advanced, with good pilots and innovative aircraft, due to a very strong push for a top of the line, modern air force by Stalin in the late 1920s/early 1930s. The I-15, and later iterations the I-15bis and I-153, was an excellent biplane design which proved itself in the skies over Spain to be quite effective, and the I-16 monoplane was one of the most advanced fight aircraft in the world when it made its debut in 1935, and similarly made a respectable mark in Spain.

But come 1941, this all meant nothing. Design and innovation had slowed, in no small part to the purges. VVS command was not only weakened, but Stalin's interest in airpower became a stranglehold as no one wished to displease him. Prominent designers had been denounced and arrested, including Tupolev, Petlyakov and Polikarpov (initially denounced way back in 1929) - they still designed, just in special prisons. The next generation of fighter aircraft, mainly the Yak-1, MiG-3, and LaGG-3 had barely entered production, leaving the I-16 as the backbone of the Soviet fleet when the Germans struck, making up roughly a third of the entire force. Almost half of the I-16s were destroyed in the first two days of combat, many of them on the ground, and those pilots fortunate enough to get into the air easily outclassed by the more modern Messerschmitt. The Yak-1 was the best the Soviets had at the time, and considered to be roughly comparable to the Me-109E by Soviet intelligence, but it too proved to be overpowered by the Me-109F which had just begun to appear on the front lines in time for Barbarossa, and regardless, most of the Yak-1s produced at that time were stationed near Moscow, with only 105 in the Western Military Districts at the outbreak of war.

As for the MiG-3 and LaGG-3, both were found to be lacking in combat with the Luftwaffe, especially at low altitudes, and both aircraft quickly gained an unpopular reputation from pilots. And besides that, just like the Yak-1, delivery was an issue. Less than 200 LaGG-3 had been delivered before Barbarossa, rather than the 593 promised, and even less had be assigned to the regiments yet. The MiG-3 had not suffered the same issues, with just under 1,000 in operation, but most were destroyed on the ground. The 9th Mixed Aviation Division, on the western border, lost 347 of its 409 aircraft on the first day, including almost all of their 233 MiGs.

So all in all, Soviet planners, who had evaluated the Soviet Air Force as being on par with the Germans, got a very tough reality check in the summer of 1941. During just the morning of June 22nd, 222 aircraft were shot down, and 668 destroyed on the ground - with German losses of 18 aircraft. Losses by the end of the day were at least 1,200 lost by the Soviets (their own records) or nearly 1,500 as claimed by the Germans, who recorded 61 losses of their own. On the 23rd, another 1,000 of so were lost.

The I-15 family was very quickly phased out to second-line use, or as a ground attack aircraft, and while production of the I-16 continued for a time simply because something was better than nothing, it was phased out by 1942. Production was also hampered by the German advance, leading to the famous evacuation of entire factories to the east, which of course makes it hard to build an aircraft while moving. A number of factories had already been planned way out there, but almost none were completed by 1941, so the vast majority of Soviet production had been in the west.

However, once production could be ramped up, the Soviet cranked our planes, especially the beloved Yak-1 (however it was tougher to build than the LaGG-3 as it required duralumin which the LaGG-3 didn't, which meant the latter remained in production too despite the hate), which became more and more the workhorse of the Soviets in the early days of the war. And designers also went into overdrive an in effort to get on par with the Germans, and they were generally successful! A number of excellent designs came out, most notably the La-5 and later La-7, and the Yak-9.

The Lavochkin La-5 was a major improvement on the LaGG-3, increasing its speed, climb, handling... just about everything. Design work began after war broke out, very pointedly to fix the deficiencies of the Lagg-3 via-a-vis the Me-109F. The team worked quickly, and the La-5 was in production by the fall of 1942, and it was a success, immediately getting positive feedback on combat performance. It still had its issues, but a good pilot could go toe-to-toe with a Me-109F and not feel like he was suicidal. However, the -109G was now coming into production, along with the Fw 190, and it wasn't until the La-5FN, with the M-82FN engine, debuted in mid-1943 that the La-5 truly had achieved parity with the German opponents, being evaluated by the Germans as the most capable fighter that the Soviets had to counter the Fw 190A-4, having the upper-hand especially in low-altitude encounters. An effective tool for air superiority anyways, the Soviets got a major assist from the western allies at this point, as the strategic bombing campaign pulled off Luftwaffe resources necessary to protect Germany, meaning that new Fw 190s were a low priority for the eastern front.

The La-5 series was followed up with the La-7, which only debuted near the end of the war, flying its first sorties in fall of 1944, with the initial batch of 30 pilots scoring 55 victories for only 4 combat losses, in 462 sorties. While it certainly had its problems - engine failure causes a number of accidents for instance, as did defective wing-spars - it was evaluated as generally superior to both the Me-109 and Fw 190 that it was flying against, and Ivan Kozhedub, the top Allied Ace, downed an Me-262 in one (A Yak-9 pilot did too, so it isn't unique...). Its late deployment meant that it never made up more than 15 percent of the Soviet fighter fleet, but it is not unfair to evaluate the plane as one of the best fighter aircraft flown during the war, and certainly is in the running for the best the Soviets threw into the mix, challenged only by the Yak-9.

As for the Yak-9, it was at a very good fighter as well, and unlike the La-7, produced and deployed in great numbers, debuting in 1942 and being the most produced soviet fighter during the war. The highly popular Yak-1 had been improved into the Yak-7, and in this in turn formed the basis for the Yak-9, which were just improved versions of their predecessors rather than revolutionary designs. Three major plants were building the Yak-9, and by mid-1944, the series was 50 percent of the entire Soviet fighter fleet. As with the Yak-1, it retained the wonderful maneuverability that had endeared it to pilots, with the improved armament and survivability of the Yak-7, and all in a lighter package. Evaluated as being equal if not superior Me-109 and Fw 190 enemies, it proved to especially have the upper-hand in climbing fights - and won the grudging praise of its Luftwaffe opponents.

So yeah, that's about the sum of it, aircraft wise. I've tried not to get too nut-and-bolts in the evaluation of the planes, and just stuck with the general conclusions you'll find. The overall picture though, as I think is plain to see, is that the Soviets were stuck in the 1930s when war broke out, but were able to turn it around quickly, and by the end of the war were flying aircraft that any German pilot would envy (I've also talked only about fighter capabilities here. I followed up about bombers and attack aircraft here)

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Edit: Me grammar good. Dates.

As you mentioned, the Soviet Air Force (VVS) was outclassed during the first part of the German invasion. This is principally attributable to the fact that like much of the Soviet military, the VVS was under a period of transition, in terms of equipment and in terms of personnel. I'll mainly focus on fighter aircraft because of the sexiness factor, but I can also go into bombers/ground-attack aircraft if there's an interest.

In the 1935-1940 period, the principal Soviet fighter aircraft were the Polikarpov I-15 and I-16. Like many WW2 biplanes, the I-15 was the pinnacle of biplane fighter technology, but was very much obsolete in 1941, unable to really compete with front-line German fighters unless the German pilot made a bad mistake. Depending on what you look at, the I-16 was the first mass-produced monoplane fighter with retractable landing gear, and was a very advanced and capable aircraft when it entered service in the mid-1930's. It too was clearly obsolete in 1941; pilots could use certain aspects to their advantage such as superior maneuverability, but the type wasn't fast enough, was under-powered, and quickly lost energy while maneuvering. Large numbers of both of these fighter types were still in service in the VVS at the time of Barbarossa, although in the process of being replaced.

The principal next-generation fighters that the VVS was desperately putting into service were the Yak-1, Lagg-3, and Mig-3. Although much better than the early Polikarpovs, each of these types had disadvantages that could be exploited by Germany's front-line fighter, the Bf-109. The Mig-3 was a very capable high-altitude fighter, though lightly armed and with little armor, but most engagements in the Eastern front occurred at low altitude, outside of it's best performance envelope and it was inferior to German equipment at typical combat altitudes. The Lagg-3 suffered from construction defects such as rotting and warping of wood paneling, and was notoriously under-powered as the engine it had been designed for was not ready for service, and was the worst of the types. The Yak-1 fared the best of the three in June 1941, in the hands of a skilled pilot able to essentially match the Bf-109 in low altitude combat, although not many were at front-line readiness when Germany invaded. Finally, the Soviet pilot pool was also in the middle of transition, and there was little time to train new pilots before throwing them into battle in the early, desperate days of summer-autumn 1941.

As the war went on, the VVS definately caught up to the Germans. By 1944 the pilot situation was improving at the same time as the standard of German pilots began to decline in the face of a long battle of attrition on multiple fronts. In terms of technology, late Soviet fighters very capable. It's always a tricky subject to directly compare aircraft, especially between different fronts where the nature, philosophies, and conditions of air combat were different, but it would be appropriate to put late Soviet fighters into the same category as the Fw-190, P-51, Spitfire, etc. After the disaster of the Lagg-3, the airframe was repurposed with more modern construction, and fitted with a more powerful Shvetsov radial engine and heavier cannon armament. The resulting La-5, sometimes seen as the Lagg-5, was a vast improvement. The subsequent refinement of the La-7 further improved performance, and the La-11, which entered service just after the war, saw service in Korea. The other "branch" of successful later-war fighters stemmed from the Yak-1, in the form of the Yak-7 and Yak-9. The Yak-9 especially was a fantastic aircraft, probably one of the best dogfighters of the war.

From the better replies, it seems like the VVS was - at least on paper - pretty strong in 1939.

A follow-up relating to that - why did Winter War go so badly in the air (as well) for the Soviets then? The Finnish Air Force was in a sorry state, flying Bristol Bulldogs and Fokker D.XXXI's and numerically overwhelmed.