True. I also think it's partially a self fufilling prophecy - ie. people who want to go to academics go to the places that traditionally have trained most of the people in academics.
At the same time, I tend to believe its somewhat like "Ivy league" schools. An attending explained it to us thusly: Everyone knows/thinks that ivy league grads are the best and brightest, destined for success, etc, and studies have shown this. However, a more recent study was done of people who were accepted to places like Harvard but didn't attend for various reasons, and found that down the road they were doing just as well as the people who graduated from those schools. Take home message: its more about the people than the institution. As long as you're getting solid training and you're managing your career and striving after your goals, you should be in good shape. Unfortunately, I don't have any actual citation for you...
It is definitely a tough call, but if a solid mid-tier program feels like a better fit and maybe is offering you some opportunities, I wouldn't turn it down just to go for a "name"...
Heh, how many PMs did we trade about this topic Gb?
BH