Recently returned from this trip (May 29 - April 18)
Water: 2 bottles per room supplied per day by hotels. 2 bottles for $1 (US) available on most of the busses. Cn buy at stores. Use for brushing teeth. Included lunches and dinners: choice of water or beer or coke (regular coke, diet very hard to come by in China). Usually tea was available in addition. Many hotel bottles are a very small size, bus ones are larger. River boat also supplied 2 bottles of water per room per day.
Bird flu: we had no problems. As of now, WHO is watching but has said no reason to ban travel to China. So far it is apparently passed by human. Advice so far is to wash hands frequently (which you should do anyhow in China). Wear mask if you have a cold or are coughing great deal. Ok to eat poultry. Don't touch live birds or poultry. (I did google search for symptoms and got all this).
Masks: a few of us brought them, but didn't use. There is pollution in most of the big cities. Had it been worse we would have used the masks. The amount of pollution depends on the weather - apparently rain clears the air for a bit. Use of masks also depends on how super sensitive your respiratory system is. However, plants are also budding, and between that and the pollution many of our group were coughing more as the trip progressed, but not enough to need the masks..
Great trip and super Program Diector (Diana Z). BTW - the air down in Yunnan Province is not polluted (OAT pre-trip to Mongolia whichI took last Sept).