Well, first of all Disney's idea of a water view is a little warped. Water view can be a full-on view of a lake, a full-on view of a swimming pool, a tiny glimpse of the lake or a tiny glimpse of a pool. I wouldn't pay extra money for a water view but you'd be saving money.
We have stayed in a preferred location and in a non-preferred location. We really didn't see that much difference. A lot of other posters say they would never stay at the CBR without staying in a preferred location. I, personally, wouldn't care if I stayed in a preferred location or not.
The entire promenade around the resort is just 1.4 acres and Old Port Royale (food court/main pool/marina/restaurant) is in the middle. So, to me no location is too far to walk.
I'd take the $400.00 and use it for something else.
Hope this helps, Lisa