This story would not have been as disturbing if it was not taking place in a crypt. It definitely contributes to the creepy effect. I think the carnival and Italy are also important parts of the setting, because they effect the characters.
I disagree that Fortunato trusted Montressor. Montressor played Fortunato. He lured him in bit by bit by first offering the Amontallido and then assaulting Fortunato's pride by suggesting Luchesi was considered by some just as knowledgable. He then assaulted Fortunato's pride by suggesting he wasn't strong enough to endure the cold, damp of the tombs. Fortunato did not trust Montressor, he was drunk and not aware that he was being played.
I think setting is vitally important in this short story, and, interestingly, I have always thought that it plays a symbolic function. It is as we delve ever deeper into the Montresor catacombs that we are exposed to more and more of the madness within. It is as if we are going on a voyage into the interior world or psyche of Montresor, delving deep into his character with every twist and turn that they take into the catacombs.
The other thought I had about environment in this short story is that Fortunato was in the middle of a city wide party. The optomistic side of all of us doesn't believe anything bad can happen during a time of celebration. You don't go to Disneyworld expecting to get robbed! Fortunato was caught up in the celebration, and I'm sure that anyone attempting to exact some revenge was the furthest thing from his mind.
Think about this to understand the importance of environment: It's the first day of school with all new teachers. The first classroom you walk into, the walls are painted blah beige, the desks are in immaculate rows with the teacher's desk front and center, walls are bare, and there is a stack of notes on the podium. How do you feel about that environment. Now, picture walking into a room without any desks, just bean bag chairs and couches, the walls are a bright yellow and covered in motivation posters and class related pictures. It's very possible that this teacher will cover the exact same stuff as the first teacher, but how did those environments affect your first thought of the class?
I think that the environment helped to shape the perceptions of Fortunato and that was part of Montresor's revenge plot he had planned to execute. Fortunato's environment changed from that of a lively carnival to the dark and dank catacombs beneath Montresor's empty estate. It didn't occur to Fortunato that there was foul play in action because he trusted Montresor. He believed he was going to taste the much coveted rare sherry. He didn't see the catacombs as his final resting place, he saw it as a good place to store amontillado. By the time Fortunato regained some sobriety it was already too late, the final bricks were being laid to rest and he was chained to wall. Montresor was banking on Fortunato's misconceptions of what they were doing at his estate so far beneath the ground so that he could have total privacy to carry out his revenge plot.