Sure this is a desert, but why should that mean that there can't be a huge fountain on every intersection? Also, while I've only been to one, there are some amazing waterparks here. Abu Dhabi is a modern city and as a growing modern city, needs plenty of water. Every morning I drive past the sprinklers watering the lush, green grass.
All drinking water is either bottled or provided by water coolers. Every home has its own. a container of 18 liters (about 5 gallons) is 7 dirhams or about U.S. $2 so it works out to not be that bad.
The natural question is: Where does Abu Dhabi get this vast supply of water? The answer is desalination. According to this site, Abu Dhabi gets 72% of its water from desalination with efforts to expand its groundwater wells. In addition, there is an effort to get people to conserve water at home. While I agree with the sentiment, and admire the effort, I have a hard time believing attitudes will change anytime soon.