Since you will be using it for water line, get an oil-less one. You could get a standard compressor and a filter, but by that point cost will be about the same, and then you have another component to maintain. Oil in the lines could be bad news for drinking water, and could also prematurely age the water lines. Any RV supply store will have an air nipple that connects to the city water inlet for blowing out the lines.
I went with 21-gallon Harbor Freight / Chicago Pneumatic. For blowing out lines a 3-gallon is probably sufficient. You'll also need hoses and and an air-chuck. If you think you might end up borrowing air-tools from a friend, find out which quick-connect fitting they use, and match that on your setup to make borrowing tools easier
For air hoses, the harbor freight stuff is cheap. That's about all I can say about it. For the most part, I've switched all over to Flexilla hoses. Might be overkill for what you'll be doing though.