There is a great video by the founder of Sunyata that explains in detail why the water analogy is just wrong. Here are a couple brief comments. When I have time I'll see if I can find the video... it is very enlightening.
For me, the jaw dropping difference with good power cords was enough to convince me they were worth it.
Misconception #1: AC Power is like water coming from a large power tank, flowing through several 10s of feet of power hose into a component. This implies that the component is at the end of this system.
Answer: “Actually, the component sits between two power conductors: the hot and the neutral. AC power oscillates (alternates) back and forth at a 50-60 Hz rate. So power does not pour into the component at all. The component's power supply is within a complex network of wires and connectors. ALL of the wire and connectors can and do affect the performance of the component's power supply.”
Misconception #2: AC power can be contaminated just like water in a hose. This implies that once the water is contaminated at some point up stream, that is must be cleansed before it arrives at the audio component.
Answer: “As stated in #1, the component is not at the end of the power hose. It is between two power hoses and the current is oscillating back and forth. Further, current is not like water at all. Electrons cannot be contaminated. There are two aspects to power transmission: the electromagnetic wave and the current flow. The current itself cannot be contaminated but the electromagnetic wave can be modulated with other frequencies. We usually call these other frequencies noise or Electromagnetic Interference (EMI). Within the various parts of a power circuit there may be EMI in certain parts that is not present in others. Electromagnetic energy can be transformed or redirected to lessen their effects.
"Some power cords use capacitors, inductors, or ferrites in an attempt to control the electromagnetic fields around the audio component. The success of such an approach is completely dependent upon the specific design and the reactance of the power supply of the component to which the power cable is attached.”
Misconception #3: There is up to a hundred feet of wire in the walls, so the last 6 feet of power cord can't possibly make any difference.
Answer: “The power cord is not the last 6 feet, it is the first 6 feet from the perspective of the component. As stated in #1 the local current and electromagnetic effects directly affect the sonic performance of the component.”