Before I post this, I'll put out a few full disclosure type statements:
1. I am graduating from a tier 2 state school.
2. I've already been accepted to med school, and I don't know specific issues that would hold my classmates back, so I can't tell the story from the perspective of a person who hasn't been accepted out of my school.
3. I believe public education and increased funding of universities should be a state's top priority after putting together a good medicaid system.
4. I'm not an expert, I don't claim to be one, and this is just my opinion on the topic.
Now, the post: Barring junior and community colleges, 9 times out of 10 where you're coming out of undergrad will not matter in the admissions process. What does matter is how well you did as far as grades, what else you did besides your coursework, what your MCAT is, who you are as a person, and what your motivation for going into medicine is. The organic chemistry molecules you will learn about are going to be the same from school to school. Is a nobel laureate in chemistry a better teacher than a newly minted professor? I don't think that's necessarily true. Moreover, I think you have to struggle to succeed more in a public university where there's an undergrad population of about 35,000 (as at my school) and the professor is teaching three 300 person classes on top of doing research. Just pick a place that makes sense (knowing that you're not going to want to come out of undergrad with debt and then run up med school debt) and where you think you'll succeed.
To sum: 3.9 from an okay school is better than (or at least equal to) a 3.5 from an Ivy. That's what I think at least.
EDIT- I should also say that a large public school will usually have a good number of opportunities for undergrad research and other things like that. The Ivy may have that in spades too, but the competition of getting those slots may be higher.