If you can get into a habit of properly letting the car idle after driving (IE Turbo Timer), you can get by without water cooling. But, as mentioned, for most daily drivers it is reccomended. Chrysler didn't have water cooling on the first turbos they installed in the K/G/L body cars with horrible results. Most people just don't let them cool down enough and warranty turbo replacements were common. When they added water cooling, it almost completely eliminated the failures.
Wiz