The whole with-or-without water thing comes down to personal preference. I went to a tasting a few years ago hosted by Jim Murray (author of the Whisky Bible) and his take was "It's already 60% water, no need to add any more!"
There are specialty malts that come in cask strength that often need to be cut with water. I never buy these because I don't want to screw up such an expensive drink with the "wrong" water (technically you want water from Scotland - not US tap water, or distilled water, etc).