Just curious about this question which was asked in the British Physics Olympiad 2004. The first thing that came to my mind was the reshaping of conductors caused by electric field in electrodynamics. Has this got something to do with the momentum of the water?
Think about the conservation of linear momentum; water comes out from the hose, causing it to move backwards to conserve the momentum. (like a rocket) The reason why it swirls around is that since the hose it attached to the water tap, it can't continue in a straight line.