RE: the squash, he'll live, but the most important thing is that if you specifically told her you only wanted him to have water and she's giving him other things, then she's not listening to you, and that's cause for concern. What other specifications have you made that she's not listening to, y'know?
Maybe to some people squash is a non-issue but others are worried about encouraging children to get a taste for sweet drinks, aspartame in it etc, and that's their prerogative to worry about. If you're paying for a childminder rather than a nursery place you should expect to be able to get a much greater say in how your DC is cared for, because they can have that flexibility.
Your response though I think does depend on how you put your intentions across to her - did you say something specific like, "I only want him to be given plain water, nothing else," or did you say, "Oh, he only drinks water," or something else vague? I mean, someone could assume that even you saying 'just water' only excluded e.g. fizzy drinks, hot drinks etc and not squash, which after all is mainly water, just with something added.
Depends how you've been getting on with her so far, and if she is usually good at listening to your requests, and if your DS is happy there. If that's all true then I'd make it absolutely clear [again] what you want [and why - not that you should need to, but it might at least make her think you're reasoning it through rather than just being precious] and give her another chance.
Otherwise, go with your instincts, but you might find it harder to get that sort of exacting care in a nursery anyway [i.e. multiple staff to forget/not be told/not care about your preferences, rather than just one person].