The tap water in Turkey is not potable.
I was worried when I read this in my travel guide, and went out immediately to Dick's and bought iodine tablets. Matthew did not, claiming that he has an unusually effective digestive tract. Seeing how many Aldi pizzas he can eat right before bed, I'm inclined to agree. I figured I would play it safe, though.
So far, I've only used one tablet.
Turks don't drink or cook with Turkish tap water; it's fine for showering, or washing clothes, vegetables and hands, it's just not drinkable. There are a couple of elements of culture here that respond to this problem.
In restaurants, bottled spring water is served. In the cafe Paul and I had lunch at today, bottles of water were be sitting on the table next to the salt and pepper shakers and napkin dispensers; this isn't normal, you normally have to order water. Some restaurants charge for water (normally 50 kuruş or 1 lira, about 33-66 cents), but nicer ones provide it for free. They always make a point of bringing the water bottle to your table sealed, so you know that it's real spring water.
In homes, people get their water by the jug, like the big Deer Park jugs in water coolers in America. In America, the jug normally sits on a water cooler, nozzle-side down, but, here, the jug sits on the floor, and a special pump is used to dispense water. Pumps are for sale at many stores, and are inexpensive, I saw one today for 6.50 lira. Jugs of water are delivered to one's doorstep for about 2-3 lira.
The tap water in Turkey is not potable, but it's really no inconvenience at all.