Distilled or spring water: Hermit crabs breathe with gills (they carry around a small amount of "shell-water" deep inside their shells for this) and through the soft skin of the abdomen. Chlorine in tap water is dangerous to them over long periods, as it causes the delicate gills and abdomen to dry out eventually. Crabs can be suffocated, slowly, if they are given tap water for long periods. Use spring water, or distilled water--something without chlorine. If you leave chlorinated water out for a few days, chlorine is said to evaporate; I prefer to just buy a gallon of distilled water to be sure. Never use a metal container for a waterdish; it will rust. Plastic jar lids are OK; the rocklike ones they sell in the reptile section are great because they provide a good climbing surface. The waterdish should be big enough to cover up to the middle joint of your largest crab's leg. If you have large and small crabs mixed, make sure your waterdish has plenty of footholds so your smaller crabs won't drown.
Salt water is needed so that a hermit crab can retain moisture prior to a molt. Moisture has to build up between the exoskeletons (the old one on top and the new one underneath) so that they detach from each other. If this doesn't happen, the crab can't molt, and will die. If provided with salt water, your hermit crab will know how much it needs; all you have to do is provide a small dish of it. One species, the Ecuadorian land hermit crab (coenobita compressus) needs to have saltwater available at all times. I would recommend this also for PPs. You can buy "Instant Ocean" in the fish section of your pet store and make your own salt water. Never use table salt, because this contains iodine; in large amounts, it's a poison! Simply combine 1/2 cup of Instant Ocean for each U.S. gallon of water; again, distilled water comes in handy for this, as it can be conveniently bought in gallon size. Stir well--and don't forget to mark one gallon 'salt'! Always make sure your hermit crabs have a supply of fresh, non-cholrinated drinking water, as well as a small dish of saltwater.