For us, between 7-8pm has been working really nice depending on how much time Abby's been in the crate.
The water thing was an issue for us too at first. They require about 1 oz of water per pound of dog.. and she was drinking between 50-60 oz's of water a day before we realized how much she was actually drinking. Once we realized how much water she was actually drinking.. we cut it back to a "normal" amount and her potty training has been going WONDERFUL ever since.
Shes now 21 lbs at 11 weeks and she getting about 30 oz's of water per day... which gets put up around 7pm. That schedule has been working good for us.