In season, reservations are a good idea at the more established places. If you have a group, ask about discounts. Towns have chlorinated water. Rain-water is used for drinking in many villages. If you are not sure ask.
Bottled water is readily available.
As for malaria pills, the form of malaria found in Belize can be cured with Chloroquine. This is the same drug that is used as a preventative as well. Chloroquine can cause liver damage if used over a long period of time, so many on extended stays opt to take their chances. For a nation that has been self-governing for only twenty years, Belize has accomplished more, during this time with regard to conserving biological diversity, than any other country on earth.