I had a water birth last Tuesday - it was great. I can't compare it to any other sort as it was my first baby though.
Got in at 6cm dilated, took about 3 hours to get to full dilation but DS was back-to-back so he needed to turn (thankfully he did). I found it did help with the discomfort and pain, don't know how much but I felt really supported by the water and it was easy to move and shift position which I wanted to do with pretty much every contraction. It was also lovely and warm which I found very soothing and was easy to use the gas and air whilst in there.
It also felt a lot more natural and private - the midwives were very hands-off - and I was lucky enough to deliver in the pool too, so I was the first to pick my son up and we had 40mins of skin to skin in the pool afterwards. I also had a natural 3rd stage, so we didn't cut the cord for 10-15mins or so.
I did tear - 2nd degree, 6 stitches, and I don't know if this would have happened otherwise - I suspect it would have done, and maybe it would have been worse. But like the OP, I didn't feel the tear and would have sworn blind I hadn't torn until the MW examined me after.
What I also liked was the fact that the birthing pool rooms at my hospital were a real home from home setting so we had our iPod on, it had a kitchen so DH could make himself (and me!) food and drinks, and it was generally a fairly relaxed experience actually (well, as much as it can be).
If I had another baby I would definitely hope to do it this way again.