@OT, I don't buy your argument that the "best water" means "best looking and best interactivity."
If I'm going with a vague category like "best water in a game" I'm gonna have to say the best is the water level in Sonic 2 (Genesis) and the worst is the dam level in TMNT (NES).
Outside of that I'd need to come up with very specific categories.
Here are Rubang's Gaming Awards--Water Edition:
I think the most aesthetically pleasing water is the water with firebars in it in Super Mario Bros., level 8-4, as can be seen here: Click for full size.
Looking back, my biggest initial wow factor when experiencing new water was Wave Race 64, so I guess I'd consider that the best leap forward with water effects that actually affect the gameplay, making it more fun. I'll call that "Game that Raised the Water Bar the Highest."
And for best use of water in any game, I'd go with Squirtle:
Honorable mentions go to FLUDD and any other game that lets you use a firehose.
Best things to do in water:
1. Sink to the bottom (iron boots in Zelda, or metal Mario in Mario 64)
2. Fishing (Link's Awakening and Twilight Princess)
3. Eating smaller fish and evolving in E.V.O.: The Search for Eden on SNES.
Most original water game:
1. Endless Ocean
2. X-COM: Terror From the Deep