A 3 day notice to quit was mailed to the tenants, via certified mail,l and the tenants have not picked up the letter does this affect the 3 days? My month to month agreement also states that the tenants must pay for all utilities and as of today they have not connected the water service (4 months after they moved in) can I disconnect the water because the bill is under my name?

You can't discontinue the water service and withhold it, its against the law. Your letter still holds though with the three days notice because it is already a fact even though they haven't picked it up.

You can't shut off the water, but you can inform the water company to close your account. Even though that may result in the water being shut off, you are still within your rights.

You can't mail 3 day notice via certified mail, it could be a problem if your tenant chose not to pick it up; you can mail it with " proof of mailing"; it works perfectly in case you need to go to court with your tenant.