I've always considered pretty good to be a positive modifier on good, making it a little better than good. Not much, but better nonetheless. I've never really understood why other people consider it to be worse than good.
See, I don't agree with this analysis. It works fine for your pretty straight example, but that's because Straight is already as straight as it can be. Something can't be extra straight. But if I were to say something is pretty cheap, I would actually mean that it's cheaper than I would mean if I just said it was cheap. Generally when I use pretty to qualify something, it's in relation to my preconceived notion about something, and that's typically made obvious by the tone of my voice as I say it.
You know, I went into this movie with low expectations, but it's actually pretty good.
but if I had just used good in that statement, it would be indicating nearly the same thing, but with a little less emphasis.
Absolutely correct. A true average can be either good or bad on the whole depending on context. For example, an American's average standard of living is pretty good compared to the North Korean's average standard of living. So, when most people say "average" are they, on average, talking about things that are good on the whole or things that are bad? My guess would be a bias towards things that are good on the whole.