The water with which you brew your tea is at least as important, if not more-so, than the tea itself. We could introduce the most elaborate of tea ceremonies with the highest Imperial grade Chinese tea, but it could still be ruined if we have water of poor quality.
Generally, town water supplies are not very good because they've been over-filtered (taking out all of the wonderful nutrients inherent within naturally occurring water) and have elements such as chlorine and fluoride added. These chemicals can often be tasted in a glass of town water, and in tea they'll often give the tea a flat, chemical flavour, and can ruin good earthenware, unglazed teaware if you're not careful!
The other thing to be extremely careful of is minimizing the amount of contact your water has with metals other than silver (this goes for your teas as well). Metal tends to impart some of its flavour to the things it touches, giving water and tea a slightly metalic taste. So try to avoid your water's contact with metal. The only exception to this rule is silver, being a pure and natural mineral. Often tea connoisseurs will have silver teaware to store teas and even teapots to pour from! An expensive hobby to be sure... Occasionally, if the teapot or other teaware has been blessed, it can also impart positive, uplifting chi upon the owner and drinker. Again, this contributes to the overall affect of the tea. Think of the positive effect of chi as the power of positive thinking, projection, etc. as there has been much written and demonstrated on this subject. The same notion applies. But getting back to water...
Fresh well water isn't bad, as long as it doesn't go through a process whereby chemicals are added or over-filtered and treated. The best water though, by far, is natural spring water. I've heard rumours there are specific mountains in China where the glaciers offer the finest, purest, sweetest waters for brewing the most perfect teas. It is to these waters the rare, specialty Chinese teas truly respond. Chinese mythology suggests some masters of tea in China used to send people for these waters to be brought back to them for their own tea brewing in stone containers. I would not be overly surprised to learn if this still occurs.
For those who believe, these waters contain the most chi energy. Have you ever drunk from a fresh, unadulterated mountain stream? It is instantly refreshing, energizing and rejuvenating when on a long hike, unlike bottled water which will merely quench your thirst (maybe). That ability of natural spring water to have such an affect is believed to be the chi energy inherent in it. Imagine brewing a cup of high energy tea, in a high energy teapot with high energy spring water! The effect is indescribable. If you ever have the opportunity, I highly recommmend taking your favourite teapot and Chinese tea with you to a naturally fed spring on a little used mountain trail, heat the water to boiling (just in case there are parasites or other nasties in it) and allow it to cool as you normally would, and proceed to have the finest cup of tea you've ever encountered. To me, there truly is no comparison. Natural spring water makes any good tea simply fantastic.