If you start with water in the pan and let it run dry (with anything but a regulated/thermostat-controlled electric smoker) you need to be there to dial the heat down so your chamber temps don't spike into low-earth orbit (you can ask me how I know this). Water evaporation cools it's surrounding environment...that's why water in the pan is so effective at controlling temp spikes. What it also will do is increase fuel use and reduce the ability to push higher smoke chamber temps when you want to, such as when smoking birds. Need higher temps? Loose the water.
I gotta agree with water vapor/high humidity creating a better environment for smoke to condense on the product, because I don't get nearly as much smoke flavor when I run with no water at all on a hot smoke.
I've only ever used one horizontal pit with SFB...all the rest of my rigs are vertical...propane and charcoal. Vertical, regardless of heat source, act pretty much the same regarding water pans and what you use in them, be it gravel, sand, water, or water in a foil liner over a solid mass. That's my usual set-up, most of the time, except with my WSM...I run it dry and bare, now days because it uses so much less fuel and is easily dialed in to a reasonable temp-range.