If find yourself getting into battles with waterfall proponents, some useful ammo can be had by going back to the source. The [link|http://en.wikipedia.org/wiki/Waterfall_model|WikiPedia entry on Waterfall] includes a link to Winston Royce's original paper. In it, he first lays out the waterfall that we all know and love, then talks about why it doesn't work, and then suggests that an iterative approach to development is preferable.

I think a number of early Waterfall proponents read the first few pages of Royces paper, thought "ooh, I get it," and then stopped reading.