Dear Peter,
I've heard many different opinions about this issue. I'm not saying that they are right -- but I think each one of them has its own good point.
Firstly, Michaelangelo may just be a parody of the "low brow" conversations coming from the room, which Prufrock is just hearing from afar and doesn't want to join at all. Michaelangelo is a trite issue, an everyday artist. You don't need to be an expert to know who Michaelangelo is. And in the whole poem, Prufrock's main problem is the inability of communicating, especially with women.
Secondly, Michaelangelo may be just seen in the light of such characters as John the Baptist or Hamlet, which are mentioned in many of his poems. In this case, Michaelangelo may be the symbol of that greatness which Prufrock will never be able to attain. Nobody speaks about him or to him. Not even the mairmaids at the end want to sing to him, he thinks.
In any case, I think there's surely a subtle reference to the cultural environment which he was living in -- whether it's a parody of it or just the modified base for further meditations.
Hope this helps.