I don't buy the water thing either. Pizza quality in Chicago is low because in Chicago pizza is generally associated with low end fast food. I'm pretty sure the "bad pizza is like bad sex, its better than none at all" line originated here (ok, I have no idea but it sounds like it should have).
I grew up here and pizza is considered junk food--or at best an easy way to feed a lot of mouths. In New York people seem to be a lot more passionate about pizza, which is what accounts for the higher quality. It's all about supply and demand. Pizza isn't new. And it's really not THAT hard to make better pizza (use better ingredients!). If consumers demanded better pizza, somebody would make it. But when the average Chicagoan has never had fresh mozzerella on his pizza, why bother? Why take the extra time to make better sauce when nobody cares as long as they can feed their kids for $12?
In a town that is supposedly known for it's pizza, how many places can WE (LTH, the enlightened) agree are outstanding (where you'd drive an out of town guest 20 miles to get to if necessary)? Five? Ten?
I'm not saying there aren't a lot of places I'll eat and can say I enjoy, but the only places I'd tout as being truly outstanding and worthy of a trip would be Old Chicago on 79th, Aurelios and Pequods. And I would take somebody hankering for NY style slices to Gigios.
So few places in a pizza town? Contrast that with ten or so Middle Eastern, a gazillion Mexican places and countless other restaurants that I consider worth a trip for. And contrast that with the 10 or so pizza places that I've been to in NY that truly blew me away (I've been to about 25 other places that were merely really good)(and keep in mind I live in Chicago and only visit NY once in a while).
Bottom line is that it's not the water. And it's not that we don't know how to cook in Chicago either. Pizza is a means to an end in Chicago. To go from hungry to not hungry and, for 99% of the population, nothing more.