I don't think one can underestimate how much the atmosphere can have an effect on service or the client's perception of service.
Personally for me, as long as the place is clean, I'm satisfied, but when the place is nicely done up, there's no doubt it enhances the experience for me. It makes the provider look far more professional, like they're serious about what they're doing and not just trying to turn over the quickest buck they can, so they don't mind sinking a bit of dough into overhead to tart up the venue nicely.
I think the best providers all realize that atmosphere is an important part of the whole experience and that how it is packaged is just as important as what is in the package (sorry, not the best wording, women are not packages).
Of my recent experience, Lucy's massage is an excellent example of a venue that really enhanced the whole experience.
Then again, I'm sure there are some pooners out there who are looking for a seedy experience, in which case cracks on the wall, bare mattress, holey sheets & dirty towels might just be in order.
Cheers,
-ZB.