I have noticed it in very hot temperatures, especially when I went to the middle east. I guess dehydration firstly causes the concentration of glucose in the body to increase as there is less water (so higher readings), but I'm not sure how effectiveness is affected in a scientific point of view. But I have noticed this.
Heat can play havoc with diabetes. I haven't noticed the relationship with dehydration. How to tell if you are dehydrated is the colour of your urine. If it's really dark your dehydrated or other medical problems. I live in Australia and at the moment in Brisbane, so I know what heat is.