OMG...this is the kind of question that plays havoc on someone with OCD tendencies..LOL
Seriously, as long as the water is clean and fresh I would say that is sufficient. OK, now here comes the OCD answer. Distilled water is water that is boiled to remove impurities. IMOCD opinion, this would be as pure and clean as can be for cleaning our precious IWC's ( nothing is to good for these babies..right? ) However, please don't take this to the next level that as pure as this water may be, it must be better to drink on a regular basis. Impurities removed in distilled water also include natural minerals which the body needs. Distilled water generally is used for specific purposes. But if you want to avoid as much impurity contact to your watch, go with Distilled. The most important rule would be no matter what degree of fresh water is used, drying the watch thoroughly immediately after rinsing/spot cleaning is your best defense and will produce that "out of the box" look.
One more OCD comment. If I find I will not be wearing watch for awhile, I store it with the QC crystal cover wrapping that came with the original packing. It's just another level of protection IMO. Most would probably discard it. I've asked my AD to save any unwanted ones for me for my other watches and he is kind enough to do it. When I pay him a visit, he always has a half dozen or so waiting for me.
There you go ..... Happy cleaning and enjoy your shiny sparkling IWC.
Best,
Andy