Does the acceleration due to gravity (9.8m/s^2) apply in water?
Yes it is the same. The only difference is that you have an extra force that is acting on the object as well. In addition to the gravitational force g, you also have the resistance from the water. To be honest, you also have a resistance force in air as well. While it is minuscule and overlooked in basic physics classes, it is what gives you the maximum velocity from falling. For instance, sky divers reach a certain maximum (because of the air resistance) speed in the air because of g, but they would simply reach the speed faster in water because of the greater resistance.
