Hey, guitar maker in Az here. I used to use soapy water for wet sanding when I first started as that is how I was shown. Soap is a must if you use water, as it adds the necessaey lubrication so the sandpaper doesn'r build up to quickly. I use dish soap, Dawn or something of the like that has a nice sent to it.
However, while looking up suggestions for a very time sensative build, I read about mineral spirits. Now, given the choice it is my sanding lube of choice. There is no risk of water getting into the holes and making the wood expand. Mineral spirits has less tendancy to allow the paper to build up as well. The only downside is the smell even with the "odorless" stuff. I also tend to wear gloves to keep it off my hands. Nitrile or something of the like. Hope this helps.
My end all is that mineral spirits works better for me, however I dont always have it on hand so then I use water and soap. Mineral spirits work better, just a little stinky