The New Haven Independent is reporting on the issue and published the statement by the local water company.
The water is being reported as safe to drink but some commenters are stating they will "definitely not drink it". - digslild
Mark, the resident SeeClickFix guru, posted a good layman explanation of the situation.
"Higher-than-normal water demands (which is what happens when a water main is broken or a fire hydrant is opened too quickly) increase the velocity of the water to a rate of flow that causes harmless material in the pipeline, such as rust and sediment, to break free."