In his latest post Brian Goff notes that top seeds in this year's tournament had some trouble putting away their lower ranked opponents and that seed wasn't a strong predictor of final win margin. While I must agree that I certainly didn't have FGCU making it to the Sweet Sixteen or Wichita State in the Final Four, at least historically, the people at the NCAA who put together the brackets have done a remarkably good job seeding the teams. Obviously, there is always uncertainty of outcome in any sporting event - that's quite a bit of the allure of spectator sports - but higher seeds tend to do better than lower ones and beat lower seeds by higher margins. Here's the data since the men's tournament went to a fully seeded 64-team tournament (minus the last couple of years I haven't gotten around to updating yet.)
Men’s Tournament, 1985-2011
The margin of victory uniformly falls with the seed and win percentage is fairly uniform as well with the exception of the 5 and 6 seed where there isn't an observable difference. There is a slight anomaly in the 8 vs. 9 game with 9s winning more often, but call that one a coin flip. Overall, I would give a great deal of credit to the bracket makers for their overall success.
That being said, it is possible that these results are being driven by good seeding in earlier decades, and an examination of whether seeding accuracy or competitive balance has changed over time would be of interest.