The dielectric constant of water is very high. Then why is it not used as a dielectric in the condenser?
Water could be considered as a dielectric because it has a good relative permittivity value (some 80's at 20 C). But, it also has some conductivity (or else electric circuits won't give shocks when touched..!). Water comes out to be dielectric because of the dielectric polarization (it's an electric dipole and is a highly polar molecule & even rotates - aligning itself in field direction) associated with it. The electric field induced by polarization overcomes the effect caused by applied electric field. But, this field could be easily overcome there's also something you need to know called Dielectric breakdown (which is 60-70 Mega Volt / m for Distilled water). This voltage could be readily overcome by an applied electric field and BTW - Water starts conducting...
Note: But, domestic water usually contains several kinds of salts like $NaCl$, etc. which dissipate into ions in a solution (by Arrhenius theory) as $Na^+,Cl^-$ etc. I think you know that the presence of charged particles (like ions) in a solution allows it to conduct electricity. BUT, water doesn't actually play a role of conducting here. It's just the medium...
(Please comment & then you're welcome to down-vote)
Depends on what you want to use the capacitance for.
If plan to use it to store energy:
Some reference values for conducitivity from www.mbhes.com/conductivity_measurement.htm :
Distilled water having a conductivity of 0.5 uS/cm (resistivity of 200 kOhms /mm)
Tap water having a conductivity of upto 800 uS/cm (resistivity of 125 Ohms /mm)
Salt water having a conductivity of upto 56 mS/cm (resisitivity of 1.8 Ohms /mm)
The state changes dependent on pressure and temperature also going from ice to water to vapor probably make it a highly variable capacitance and also difficult to manufacture.
If you plan to use it in a filter circuit, the permittivity of water changes as a function of frequency. Making it difficult to predict the cut-off frequency.
There are other applications that are of interest
The high relative permittivity of water used to detect the presence of water in a capacitive sensing circuit make it for example
Thought I just may contribute a bit of what I learned during my research on this topic.
Pure water is a non polar dielectric. Water molecules are moving randomly. They are not tightly bound to each other. In an electric field the water molecules are polarized. But they are not at rest and can't induce charges to produce electric field like a solid dielectric. The motion of water molecules varies the capacity of a capacitance constantly. Therefore water can't be used as dielectric in a capacitor.