The answer to this question is an overwhelming, "It depends!" There are so many factors that are involved when deciding which water is best that it is difficult to say exactly. Increasingly, we see that well water that seemed fine for decades is experiencing major difficulties. Over fifty percent of the time I am told that my water was fine for twenty, or thirty years, but now I am having problems. So, the answer might actually be, it depends on how old you well is. It might also be tied to it depends on how deep your well is and what type of well it is. All these factors are also tied to how old the well is.
One glimpse of an answer to this question is that maybe it is a tie, again depending on the age of the well. A Presidential commission under President Obama came to the conclusion that when you consider all factors, which include possible contaminants in both municipal and well water, they recommend that you treat all water from all sources. Almost every factor of your water condition affects your appliances and health. One example is hardness. Hardness affects your house health and personal health. Your house, as an investment, is worth less with hardness in the sense that the hardness clogs pipes, reduces pressure, destroys appliances and generally wreaks havoc on the hot water heater, dish washer, etc. Regarding your personal health, hardness over three grains per gallon reduces the ability of the water to do its primary job, which is to rinse. Hard water causes soap to turn into a curd in the water rather than rinse the soap out of the water. This means that NOTHING is clean after washing with hard water. This causes clothes to smell, dishes to remain dirty after washing and can complicate skin issues in the home.
The concept of well and spring water was a great concept at first, but the fact is that nature can contaminate your water as fast as chemical plants. That is a huge blow to many naturalists, but think of it this way. A recent outbreak of e-coli in the US was caused by organic spinach. Farms are using fertilizers that are sprayed on and this liquid fertilizer goes directly into the watershed. The Total Dissolved Solids (TDS) in well water makes the water like salt water for drinking. The higher the TDS, the less hydration you get from the water on a cellular level. Dead squirrels in wells, dead animals upstream from your well and nature in general ruin your water for both machines and your overall health. If you don't drink it, you shower in it. If you shower in it, you breathe it. If you breathe it, you might not want to have bacteria, even the non-pathogenic Iron bacteria.
In short, if I had to choose between the worst well water I have tested and the worst municipal water I have tested I would choose the municipal water. That said, I would still, in most cases, filter (RO and Carbon) and soften the water.
Rob researches and writes articles about quality drinking water and air quality in your home. Join the clean water and clean air cause by getting the Safer Homes Newsletter [http://safer-homes.cybervillage.com] completely free and certified completely spam free. Rob is the producer and host of the SpotLight on Success Radio Show which airs on/in BlogTalkRadio, Life and Homes Magazine and CyberVillage Radio about four times monthly. Find the show by Googling CyberVillage Radio. With over a quarter million media consumers and growing Rob interviews successful business people like Andy Kurtzig, serial entrepreneur and founder of JustAnswer.com. Join us to learn what fuels the success of our guests. The show is available in iTunes and hundreds of other places. The show is currently honoring former military business founders.