It's not the bigger the school the more prestigious (*cough*Texas A&M*cough*). If you look at places like Princeton, Rice, U Chicago, Dartmouth, Caltech, etc., you'll notice that prestige !!!!= size of the school (these are all very small schools but among the most prestigious in the country).
As an anectode, I attend an Ivy-Caliber (top 15 by U.S. news) prestigious school--my roommate, after freshman year of college, was offered a law internship based solely on the name of the school ("we need more people from -----------"), and snagged a spot (that usually goes to first year law students in the area, although the law schools around here suck).
But the way I see it, it's not "great school = great pay." It's exactly like Syringer put it--the reason people recruit from these schools is that they know (very much moreso than a non-prestigious or a state school) that anyone they recruit will be very smart (chances are, that is) and should be able to pull his/her own weight. It's a gamble with a state school, because, although there are plenty of smart students there, it's in much less porportion and you may pull someone who's not what you're looking for.
Also, connections are easier to attain (IMHO) at a top school.