Because water is made of hydrogen and oxygen, it can dissolve to release both hydroxide (basic) and hydronium (acidic) ions, making it a natural buffer solution. This means that water can neutralize to some extent either an acid or a base; additionally, water is an excellent diluent for both acids and bases.
It's very important for blood and other body fluids to remain at a stable and correct pH. This allows various enzymes and other proteins to keep their correct structures, as pH extremes are likely to denature them and make them nonfunctional.
Water is also an excellent temperature buffer, as it is able to absorb a good amount of energy without experiencing a large temperature swing. This is equally important for protein structure.