Ok, I finally got around to documenting all the tips I use when swimming with my Garmin Forerunner 305 GPS, hopefully this will help some - as it seems like a semi-frequent question. Complete with pictures, diagrams and tons of descriptive text.

http://dcrainmaker.blogspot.com/2007/09/how-to-swim-with-your-garmin-forerunner.html

Good luck!