I'm wetsanding in the garage.. what I use is a soft sanding sponge (320 grit, but it doesn't matter since I just wrap the paper around it), a bowl of water, a lint free cloth for cleaning the car (bought a 6 pack at walmart), and a spray bottle.

I start by spraying down the entire surface to be sanded. The water usually stays there in beads. Then I'll dunk the paper and sanding sponge into the water, and start sanding while spraying. I do the whole panel (the whole hood, whole fender etc.) before wiping it down. First wipe it dry with the cloth, then rinse out the cloth a few times and go over it a few times with the cloth still moise, until the residue is gone.

Also, as Charger suggested way back when, it works well to use your hand to hold the sandpaper, especially on tight spaces. Also on tight, contoured spaces I will bunch up the cloth and put the sandpaper around that, so it takes the shape of whatever I'm pushing it down and sanding on.

If anyone out there knows where to get a quality spray bottle, let me know. All of mine eventually start working badly, leaking or the lever thing starts sticking..