I've had two water births and would highly recommend them, especially if you're the kind of person who finds baths relaxing or soothing.
I agree with those who say the pool adds a slight separation from the rest of the world. Considering that there were three other people (MW, student MW and DH) in the room the first time, plus another MW popping in and out, it felt very private. I could move around much more easily in the water, and it just felt good.
I had a slight tear (no stitches) each time but the second one was mostly due to the speed with which DD2 arrived - I don't think anything could have prevented that from happening!
In terms of clothing, I'm normally very self-conscious but by that point so many people had examined me that I had had no modesty left and just wanted to be comfortable so went in the pool naked. The midwives have seen it all before. I was also surprisingly unphased by the tiny bit of poo, as beforehand I'd been really anxious about it. In fact, it was quite funny so eased the tension (in any case, it's good practice as dealing with poo will be a BIG part of your life for the next year or so!
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One thing I hadn't thought about beforehand was that the water would wash off the blood and gunk from the baby. I'm sure I wouldn't have been bothered if they hadn't been 'washed' but it was kind of nice that they were (hope that doesn't make me sound like the kind of person who's really neurotic about cleanliness - it's just one of those random thoughts that popped into my head when I first held DD).
The one bit I didn't like is that you have to get out of the pool to deliver the placenta. I was still quite wobbly so getting out was a bit tricky. Also, I was comfortable and didn't really want to get out, and certainly didn't want to let go of my beautiful baby in order to lug myself back into 'the real world'!