I've had good success getting out water marks with a bath and reconditioning. If it is truly just water staining, they seem to come out. It can be hard to tell what the stain is until you get the bag and start working on it, however. I have a British Tan Weston Shopper that has some other type of stain on it, probably an oil of some type. It also had water staining, and I thought the oil stain was a water stain when I bought it. The water stains came out, but the oil stains didn't, and I haven't decided what to do with them yet.
I was researching and found this youtube video (http://www.youtube.com/watch?v=Mx2DG5Dgmpw) about stains, and it does mention oil stains and using corn starch at time 3:19 if you want to skip the beginning of the video. I have zero experience in rehabbing so I don't know if it would work, but it might be worth a shot since you probably have corn starch sitting in your kitchen anyway!