Sounds a bit fishy. Richard Marquand's film "Eye of the Needle" has some quite graphic sex and nudity, (not to mention violence) and it was the film Lucas screened before choosing him for Jedi. Plus the whole idea of Jedi being celibate priests didn't really exist at the time.
Of course, George did invent the whole Slave Leia/metal bikini business, so maybe he's less prudish than Steven! ;)