> I think I heard somewhere that the speed of
>light changes when it passes through different
>medium, thus explaining the diffraction of water.
> Did I get that mixed up somehow?

Yes, light "slows down" as it passes through different mediums. The constant "c" is the speed of light in a vacuum. I'm not exactly sure if this is what causes diffraction, but I do know one cool little tidbit--the glow produced by a nuclear reactor core is produced by charged particles exceeding the speed of light in the water surrounding the core. It's called Cherenkov radiation.