Living in NYC, I can concur with someone above to say that the best dressed people reside in Europe, having been born there numerous times. While NYC is a undoubtedly a major contestant for the being the best fashion city in the world, LA is not.
The vast majority of these "well dressed" people in NYC aren't even American, & in LA the "well dressed" are the wealthy but simply even they struggle to dress themselves sometimes. The culture there is completely different than how it is in NYC or Europe.
Back to my first sentence. Paris & Milan are the two powerhouses of the world. Fashion is synonymous with those two cities. While NYC may (arguably) triumph in the shopping aspect (soho, barneys, fifth ave, blah, blah, blah), the greatest designers are either Parisian or from Europe. Why is that? Because of the culture. European culture promotes a well dressed individual. Shit, some of the best dressed, & best looking people I saw were in Stockholm. The whole "melting pot" argument brought in by someone just points out America's flaw in respect to fashion. Outside of any major city here, any guy who has an interest in fashion is labeled as a "fag" & other words like that because there's no respect for it like there is in Europe.