For 3D or 2D?
3D, you can do this in a number of ways. If you check out Rob's (BloodLocust) cubemap demo, you can see his water looks pretty good. You could have a mesh, and raise and lower vertexs in it to make it look like waves. You could also take a render from the waters point of view, then apply this as a texture for your mesh. It would basically reflect the surrounding enviroment.
3D, you can do this in a number of ways. If you check out Rob's (BloodLocust) cubemap demo, you can see his water looks pretty good. You could have a mesh, and raise and lower vertexs in it to make it look like waves. You could also take a render from the waters point of view, then apply this as a texture for your mesh. It would basically reflect the surrounding enviroment.