I've never had a water bed myself. My mom had one of those reduced motion ones several years ago. Such a pain! They're annoying to fill, maintain with chemicals, annoying to empty and are a real bitch to move since they're so damn heavy! The few times I've slept on it, it never passed the "Hey that's cool!" test so regular mattresses for me. Not too soft, not too hard. Gah, had a girlfriend who's family slept on rock hard matresses. Crazy parents! I needed some foam padding to sleep on one. Yuck!

As for sleeping on your arm on regular mattresses, I do that often. I've woken up twice with whatever arm being completely numb. It was rather concerning as I flopped about the arm to slowly get blood flow back again. I still find the position comfortable when I don't want or have a pillow.