A reason could be, that your digestion works worse in altitude. Because your stomach is getting work to do when you drink (or even worse, when you eat), you could feel sick so generally your condition feels worse.
Nonetheless your body needs the water, it is imperative to be properly hydrated. So if you can't drink anymore (and if you can't eat anymore for longer time periods) you will get weaker. And you might get in serious trouble then. You also can't decide if physical problems are caused by dehydration or altitude sickness, which makes it even more difficult to judge your situation.