There is a fine bunch of people on the web who can do a far better job than me 
at explaining the nitty gritty of water rocketry.
So since i'm quite lazy i will simply direct you to them.
If (and i do recommend it! ) you want to know more about it.
there is a few list of links out there but 2 of the most exhaustive are:
Gordon McDonough and Clifford Heath Who is also owner of the Water Rocket mailing list.
To inquire about the mailing list , go there "http://www.osa.com.au/~cjh/rockets/list/"
and "join the club"