http://www.newscientist.com/gallery/dn15039-week-in-space/1
And Armadillo Aerospace actually plans to launch this thing into orbit after you pay a 100,000 dollar ticket. It looks unique, you put on a diving suit, go into the water bowl part and you have a 360 degree view of space.
I imagine that it only goes about 30-100 miles up, by the looks of it it has booster that would atleast slow its decent, and there is probably a parachute system aswell.
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I doubt there is water in there, it would weigh too much. The biggest issue in rocket science is weight. Plus, if you are weightless, why would you need to be in water?
Seems pretty cool tho.