Water is unique in that it absorbs large amounts of heat without much alteration in its temperature. During the day, the seas rapidly soak up a great deal of heat, thus the Earth stays fairly cool. At night, the oceans release the vast amounts of heat that they soaked up during the day, which combined with atmospheric effects, keeps the surface from getting too cold at night. If it were not for the tremendous amount of water on the Earth, there would be far greater day and night temperature variations. Many parts of the surface would be hot enough to boil water in the day and the same part would be cold enough to freeze water at night.
Water is an excellent temperature stabilizer.
The large amount of water on the Earth could create problems, though. If something is heated, it expands, and when cooled, contracts. Thus, given two objects of the same size and material, if one is cooler, it will be heavier. This may not seem like a problem, but in the case of water, it would be, if it were not for a rare anomaly. If water continued to contract when cooled, it would become heavier and thus sink to the bottom of the ocean.