Why do power stations use steam to drive turbines? Wouldn't it make more sense to use a liquid with a lower specific heat capacity/latent heat of vaporisation so that less energy was used up in converting the water to steam?
 A: A lot have been tried (or at least suggested) historically - see Unusual Working Fluids eg. Ammonia, Petrol and Alcohol, Mercury, Chloroform, Carbon Disulphide, Potassium vapour
Even legitimate researchers have tried a few interesting compounds, eg. methanol, Freons or toluene.
Most are highly toxic or corrosive or explosive - or frequently all of the above !
A: I'd like to address the question in the body of your question:

Wouldn't it make more sense to use a liquid with a lower specific heat capacity/latent heat of vaporisation so that less energy was used up in converting the water to steam?

For larger power plants this is actually not an issue, because they use condensing turbines. These condense the steam back to water, which increases the pressure gradient and allows more work to be extracted. For a turbine of this type, much of the energy that goes into latent heat of vaporisation is returned as work, so it's not wasted.
Old-fashioned piston-based steam engines use a similar principle. At one time it was thought that simply using air might be more efficient, since it expands without any of the energy going into latent heat. It was this kind of question that led Sadi Carnot to develop the first principles of thermodynamics, and it was his work that showed that you could recover all the energy that goes into latent heat.
Of course, if your power plant uses a non-condensing type of turbine and simply releases steam into the atmosphere, then the energy in latent heat is indeed wasted. I suppose the choice of working fluid in that case is determined by needing something that expands a lot on heating, is readily available in large quantities, and won't explode, corrode the machinery or pollute the environment --- in this case water is quite likely the only practical choice. In practice, I believe the waste steam from non-condensing turbines is not usually directly released but instead is used for some other industrial process or to heat homes, in which case the latent heat is not really wasted either, even if it's not turned into work.
