I think water can make a level better from a theoretical standpoint, by making a level more strategic. It's difficult to use well though.

In practice, water is a bad idea. I have never seen a multiplayer level that uses a lot of water become popular. Ones that use it just a little bit do alright, but ones that make it a central element never seem to do well. I made a CTF level once that used water and it never became popular. The fact is, players don't like to swim. Even if it makes a level more strategic and more interesting, water is just too slow, and jj2 is a game where speed is everything.