Part of what determines the bottle's velocity
is the Momentum of the escaping particles. Momentum
is defined as the object's mass x velocity (speed), or
Momentum = (mass) x
(velocity)
The Conservation of Momentum
Law requires the momentum of the bottle to be equal
but opposite to the momentum of the escaping air. Therefore,
more massive particles will impart more momentum [hence, velocity
(speed)] to the rocket.
Water is almost 800 times more
dense than air. Consequently, when the rocket expels water
it expels much more total mass than when it expels only air.
The increased mass results in increased rocket performance!