One or the other. While there are obviously Preferred rooms with water views, you can't reserve both. You can reserve a Preferred location, and request a water view.
Preferred rooms are in the two 'islands' closest to Port Royale (see any CBR map for more specific information). Remember that even in these buildings, some rooms have to be the furthest away from 'everything'.
Water view rooms are rooms whose window faces the lake, or a pool, or a fountain, or a puddle... not even necessarily head-on, you may need to look to one side or the other. Also, given that there's a public walkway adjacent to your room, and between your window and any 'view', well, it's up to you to decide if you want to pay for a water view while passersby get to look in your room free.