I don't think it's so much that people won't pay more for quality. It's more how can quality stay in business when only so few pay for quality. I won't go so far as to say that Wal-Mart is evil; I'll reserve the right.
I have had the luxury of watching Supercenters come into two different communities over the years. The first one completely decimated the local business community and bankrupted more than a dozen stores in the area.
The second one has only been up for about a year so the effect really hasn't been felt one way or another on the community yet.
A friend of mine was going to expand his fast food franchise and open a second store on some land he was going to lease from Wal-Mart that they weren't going to use. The list of demands came pretty quick. (How highway access was going to be handled; What hours the joint could operate; where employee parking was to be situated, holiday decoration, Wal-Mart reserved the right to forcefully remove them from the premises if they couldn't adhere to these standards, etc....) The list of concessions were ridiculous, but this was the price of doing business with Wal-Mart. My friend chose not to. To be honest, it was one of the reasons I went to work with him while he set up shop.
Wal-Mart has an enormous influence in the area. I'd rather like to see if the folks who are praising the Wal-Mart name live in "Wal-Mart Zones"