The amount of water doesn't matter unless you are adding quite a bit and it dilutes the beer. 2 cups is what I usually use when bottling. You just need enough to allow the sugar to be dissolved and boiled.
Same here. I use 2C of boiled water to dissolve the priming sugar in. Especially when using over 5oz for 2.5 volumes co2 for APA's/IPA's. I also thought that it'd keep all that sugar thinned down enough to dissolve in the bottling bucket easilly.