I have worked with vinyl before...I was scared that it would be very tricky but if you follow the instructions included with the vinyl to a t you wont have any problems. When you cut your vinyl its important not to cut through the backing so always do a test run first to ensure your settings are correct. Then after you have cut it you remove the excess. You will use transfer tape to apply the images to the water bottles.
I actually have a tutorial here:
http://thecuttingfiles.com/2011/10/haunted-wall-art/