I do not think it is capitalism per se - some of the ugliest creations were made under the Soviet style socialism.
The problem is not the mode of production itself, but populist tendencies embedded in it that drive everything to the lowest common denominator. In the Soviet-style socialism and, ironically, US brand of Puritanism this is manifested by conspicuous endorsement of "common men" and denouncing everything that smacked of elitism, especially the high culture. The plain and crude became beautiful.
Another manifestation of Puritanism is the so-called economic rationalism - which is an aesthetic belief rather than a bona fide attempt to maximize utility. Well designed and built things generally last longer - both physically and emotionally (i.e. people tend to keep them longer) - than cheaply produced crap. Therefore, manufacturing and pushing cheap crap is an expression of puritanical attitudes toward decorum which perceive it as unnecessary and "evil" frills.
It is not a coincidence that the people who brought us Puritanism were the same ones who gave us the "bottom-line" economic theory and practice.
Wojtek