The 24-year-old England man left Manchester United this summer.
The Three Lions forward, who started the FA Cup semi-final against Reading on Saturday in a striking role, is the current top scorer in European Championship qualifying, even though he had managed just eight goals in his 33 games for the Gunners before the game with Reading.
Murphy thought Welbeck has been involved more, and impressed more, than he would have done had Louis van Gaal not agreed to sell him to Arsenal.
"Danny Welbeck has played more at Arsenal than he did at Manchester United," said the 38-year-old. "He's had good form even if his goal scoring has not quite been up to the level you'd expect. The fans have taken to him.
"He is very flexible, and his goal at United was such a sweet moment for him. I'm glad he celebrated it. Arsenal have such an array of fantastic attacking players but he is still contributing more than he was at Old Trafford."
Former England midfielder Murphy, who had spells at Liverpool and Tottenham in his career, was himself a versatile player, who often played out wide despite a preference to play in central midfield.
Welbeck, who has played out wide and up front for the Gunners this season, has gotten a lot more minutes at the Emirates this year than he would have if he'd stayed at Old Trafford. He already has more game time under his belt than he managed at every one of his United seasons except his breakthrough campaign, and though his contribution in goals and assists remains a topic of debate, he has more than played his part as Arsenal have risen to second place.
Though he has been on the substitute for much of the club's recent impressive eight-game winning run, he has contributed assists on each of his last two starts.