I believe it is. I personally have good gear, but i won't talk about myself, but my experence of someone else.

I know a chap who used to attend sessions on a casual basis. he played a beat up crap suzuki guitar,(bright red with flowers, you may have seen the odd 1) and used to do the odd charity gig, amped up by mic's, leads amps amd speakers that quite frankly should have gone down with the Titanic. He was crap because his sound was.

2 years ago this same man inherited a bit of money, and decided to invest in the music, and try getting a few gigs properly. He Bought a Martin Dreadnought, origanally a HK Audio rig, but now uses E'V's,with a Mackie Desk plus decent mic's stands, leads and all the rest.
His output now sounds far better as well as looking that bit more proffesional, and is gigging 3 to 4 nights a week. His songs, playing and what he actually does, never changed, but he now sounds like a performer instead of a crappy wannabe with beat up gear.
It does make a difference