With the side fire box on my SNP 40", I was using an old 4-qt aluminum pot (handles removed) on a grate above the coal-bed towards the far end. I had a full tuning plate, so couldn't use a pan under the grates due to clearance and baffling issues. The water pot would boil-off about 4 qts/hr, which is alot. I did notice the need to remove the water pot when setting the bark on meats, and especially when smoking chicken for a crispier skin. The water pot also helps for temp control...temps would spike pretty dramatically if the pot boiled itself dry.
It does add a huge amount of humidity which helps your meats to be more forgiving (less likely to dry out) if taking them to high finished temps (brisket, butts). The draw-back is that with water evaporation, it causes a cooling effect. The more water evaporation there is, the more fuel required to compensate and keep chamber temps up. This rig was using up to 2.5lb/hr of charcoal with dry, moderate weather, and about 3lb/hr during inclimate weather.
Had I known then what I know now, I would have used a pan under the grate next to the SFB. This would have required a bit less fuel and achieved the same results, however, refilling the pan would require opening the smoke chamber lid causing the loss of valuable heat. I guess it's sixes where to put the water pan or pot...a compromise of sorts.
Eric
EDIT: On second thought, I would still have used the water pot in the SFB. It was pretty trypical of me to load that smoker from front to back, end to end, and I needed the smoke chamber grate space without a water pan underneath. The thing about water pans is that any meats that get too close will simply steam and get little to no smoke. My brinkmann gourmet vertical taught me that lesson.