I appologize in advance for any portions of this posting that sound *****y.
The diving industry like any others has the range of excellent, mediocre, and down right $hitty shops/instructors etc. The reason that we push shopping your LDS so much is because of the things that your LDS can provide that the internet can not. A lot of these things your LDS provides at no cost, when all of the LDSs go out of business becuase of constantly being undersold by the internet, the average diver will finally realize the value of these services and by this time it will be too late.
Fairbanks tells a story that admittedly is more common than most of us would like to see. These LDS horror stories tend to come out of places where there is little competition from other LDS. In locations where there is a lot of competition these crappy LDS tend to go away on their own. Most of the agencies now require dry suits to be used in confined water prior to using them in open water. They also should not have been using an AOW student as a victim in a rescue class-I don't think any of the agencies specifially prohibit this, but common sense tells you it is stupid. Most instructors will also agree that BOW students shouldn't be imediatly pushed into an AOW class. Also to address the shop only carrying DUI drysuits which yes are very expensive, but lets face it they are the best IMO. DUI often has utilized an exclusivity clause in dealer agreements, where a dealer agrees to only carry DUI dry suits in exchange for being an authorized DUI dealer.
Don't just shop the internet because you can buy gear a little cheaper, I know some of you have mentioned major price descrepencies. Dive shops should be selling gear at MSRP or close to it. MSRP in the diving industry and just about everyother industry is about a 100% mark up over dealer cost (myself and family members have worked for or owned businesses in jewelery, office supplies, furniture, and hardware). This mark up is necessary to cover the costs of shipping, employee salaries, property leasing, advertising, utilities, they have a huge amount of money tied up in inventory, not to mention liability insurance which for a decent sized shop that teaches classes, fills tanks, and runs trips could easily be upwards of $10,000 a year and lets face it they need to make a profit. The internet minimizes a lot of these costs, they can function with one guy working out of his garage a couple hours a week, they pass the shipping costs on to the consumer(in most cases, and typically these are inflated with "handling" charges-that $5 pays jim-bob the employee to get up out of the computer chair walk over to the shelf that has the B.C. you want, stick it in a box, slap a label on it and toss it in the pile for UPS).
i can't tell you the number of times that someone has come into the LDS I work for and tried on wetsuits, asked me a thousand questions about which thickness of wetsuit to get, finds one that fits perfectly, then says "thanks I think I can get it at $&#^.com for a lot less". Of course you can get it a lot less. Your .com didn't have a knowledgable person working with you for 3 hours that they have to pay, they didn't have to provide you with a fitting room for you to try on your suit...hell you wouldn't have known that the zipper goes in the back if you depended on the internet. They didn't have a dish of candy sitting on their counter for you to scarf down while you debated which suit to get, they didn't have to vacuum up all the dirt that you tracked on to the carpeting, and they didn't have to carry out the trash from your McDonald's extra value meal that you threw away in the store. They didn't have to pay for the toilet paper, (and lets hope soap and paper towel) you used when you had to "use the restroom" during your 3 hour stay....yep this is the *****y part I warned about earlier!
Many internet sites have practices that makes their warranty invalid. If you are buying SCUBAPRO gear for example this can be a lot of money in the long run as SCUBAPRO does free parts if you get your regs serviced every year. At $30-50 per reg each year for parts even a discount of $150 is gone in 3-5 years. My LDS also provides a discount for labor on annual reg service if the items were bought from us, this saves you about another $10 per year. We also do a lot of "no cost" repairs-a little silicone greese, re-gluing kneepads to wetsuits etc.
Not to mention, you decide to switch from using an octo to an integrated air source... where are you going to find a plug for that extra hole? Good luck finding (and getting) an o-ring, any other parts for your regulator the day before you leave on a dive trip.
Add into this that most BOW SCUBA classes are opporated at a loss if you look only at the tuition cost vs the expenses associated with the pool, instructor, and wear and tear on our rental gear. This loss is alleviated if the students purchase their Masks, fins, and snorkle from the LDS. You buy your BC, reg and gauges from us, and we actually discount the price of the class from your gear purchase.
The issues of shop loyalty I have also witnessed in other industries, to an even worse extent than I have seen in diving. I recently purchased a new car, and was chewed out over the phone by a sales guy for buying a car from another dealer after looking on his lot.
In diving however I almost see it as a positive thing (being loyal to a shop, not getting harrassed for stepping foot in another shop). When I started diving I was very enthusiastic about the sport, but I was a poor college student. My LDS recognized this and the instructors at the shop helped me make good decisions about the gear that I was purchasing, I actually still use the BC that I purchased shortly after my BOW course. They helped me out by getting me into the local quarry free, i'd help out with events at the quarry and in exchange would get in free, and would get free tanks and air. It is these touches that I would not have gotten from the internet, I would have gone cheap and bought a computer that didn't do nitrox then would have had to buy another one a couple years later, I would have bout a bc that wasn't weight integrated, then wanted to buy a new one.
lets change the LDS quote to "support a good local dive shop"
Go figure....But what got me was when the instructor got on me in front of 2 other students about how I like to "BRAG" about diving with very little ditchable weight. And how many "tech" and "cave" divers don't know how "heavy" they really are! What a CROCK! Just another dig on my backplate and wing in front of the other students that they want to brainwash into buying BCD's, weight harnesses etc.! My "rig" does not conform to there P***, D** and LDS sales strategy I guess! 
