Great question! Water cooled PCs have been gaining popularity among both hardcore and novice computer users. They once were considered only for the elite gamer who spent dozens of hours fine-tuning every system spec in their rig but now, with improved technology and more reliable hardware, they can be installed in almost any desktop on the market!
The main benefits of having a PC cooled by water instead of air:
1) Better thermal transfer of heat between components and the cooling system.
With a water cooled system, the heat is moved through the coolant rather than being blown around the case by a fan. Also, you can have multiple components (CPU, GPU, Motherboard Chipset) linked through the same water channel and they will all share the temperature reducing benefits without significantly compounding the heat.
2) Less fans = Less noise.
A decent water cooling kit is efficient enough to reduce the temperature of multiple components with only one fan. Some external water cooling kits don't even require a fan, they use the surface area of a large metal radiator to dissipate the heat away from your computer. Of course, I only suggest one of those systems if you don't mind having a large metal object protruding from the back of your case.
3) Cooler temperatures sustained over time.
Electricity generates a lot of heat. An air-cooled PC is greatly affected by the ambient air surrounding it because it is using that air to push the heat building up in the system. When you have a surge in temperature (from gaming, media streaming, etc.) a fan has to cool the components and force all of the excess heat away from the computer. It's like trying to cool an oven with a box fan in a small room: It will do the job but it's going to take a LONG time.
4) Today's water cooling systems are efficient and reliable.
There are enough varieties of cooling systems on the market to fit any case, budget, or user experience level. You can buy ready out-of-the-box models like my personal favorite, Thermaltake's "BigWater 735 Liquid Cooling System", or custom make your own using any combination of components. The main thing to look out for when purchasing a system "á la carte" is that the tubing diameter of your fittings are the same and that each water system component is compatible with your coolant of choice.
There are as many websites dedicated to water cooled PCs as there are water cooling systems on the market. If you give me your current system specs -- like case manufacturer and motherboard/processor -- I could easily design you an affordable water cooling system that will last for years to come. To see just how many different combinations of systems are out there, check out Xoxide (www.xoxide.com). They have all the latest equipment shown in high quality images with detailed specifications.
Bottom Line: Water cooled PCs maintain cooler temperatures (especially during heavy use) better than their air cooled counterparts.