It's certainly at least partly a reaction to the legion of Toronto boosters who assert that this is a world-class alpha-dog city, what with our universities on par with Boston's best (somebody actually asserted that on a UT post a while ago), our world-class condo boom, our world-class food culture (though sadly under the Michelin radar), our world-class public transit, and our world-class idea generation on par with Silicon Valley. I mean, with respect there aren't a lot of people in Hamilton comparing it to the world's most dynamic cities, because people there are sane. But in Toronto's case deluded hubris knows no bounds. Provoking howls of disbelief from people who don't hate Toronto, but maybe have travelled enough to know it's not the navel of any known universe.
Hahahaha... MJL asks a pretty subtle and interesting question, and you go off on a 'world-class' tangent, pman. If you hate the city, don't bother to talk about it so much. It'll remain an alpha city even in the face of your silence on the subject.
FWIW, MJL, I think Kitchener/Cambridge (I don't know Woodstock or Guelph as well) has had a really hard time shaking off the car culture / strip mall ugliness that makes up their suburbs, and in Kitchener's case downtown was left to rot. But I think they're slowly coming out of it -- witness the UW Architecture school and clean up of Galt or the (somewhat) revitalization of the Farmer's Market area of Kitchener. Hamilton has done some decent things, too.
My comparison is France, and there are some really ugly downtown/car-culture regional cities there, too. The ones that took a beating in WW II and were re-built with concrete during the 50s-70s look really, really bad. (I'm thinking of Lorient or maybe Rennes (not as bad)). Marseilles took advantage of its Cultural Year to revitalize the old port, but still has some very terrible '70s crumbling towers in its tougher quarters and no-go zones around them. Those regional cities (not that Marseilles isn't a big city) are slowly doing the same as ours: burying the sins of the shiny new car culture. It's just going to take some time.
IMHO, politicians like shiny new projects and hate the boring old things like fixing the pipes. Since Toronto has aged 50-70 years after its post-war explosion in size, we're now grappling with lots of 'fixing' and not as many 'shiny new projects', but I'm not sure it's due to a infrastructure deficit, per se. Just different priorities.
Stratford does small town well. St. Thomas. Niagara-On-The-Lake, although it's a little twee. Waterloo. We've got a fair number of nice small to mid-sized towns.