I'm from the UK, and this question never comes up anywhere in the country (I'm aware of the scale differences we're talking about)- if you travel anywhere, you can drink the tap water.
Municipal water supply has stricter standards than bottled water.
While I'll never admit this in person in front of a New Yorker, water does taste better in the city.
This is not to take away from the fact that water here is mostly safe to drink. There was an incident earlier this year with a broken mains flooding Hoboken which left a little bit to be desired in terms of communication. However, overall I'm fairly satisfied with the water here. I imagine it is the same idiot antivaxxers who don't want fluoride in water but I haven't looked into it.
Fluoridation has absolutely nothing to do with taste.
The reason NYC's water tastes better than NJ's is simply that it comes from a different source.
Maps:
http://bfsweb.org/onemillion/09%20One%20in%20a%20Million%20-...