Most any soda bottle will work. Pop bottles made of PETE plastic are designed to hold the pressure of the CO2 fizz to +100psi. Bottled water containers generally are not. Do not use these, they can explode. Well, I guess anything will explode with enough pressure behind it... he he he
Anyway, 20 oz bottles are more aerodynamic than a 2 liter bottle, but
they do not hold as much air. The new 24 oz bottle are nice because
they are the same diameter as the 20 oz but are longer. The more
volume you have the more oomph you will have behind your rocket. This said,
if you can join the bottles together, you may attain a higher altitude.
In order to join
2 bottles together I use this method of gluing and using "lamp rod".
Another joining method is to spice
bottles together like Bruce Berggen does. Note: I don't use his
instructions for Converting Florescent Tube Covers into Rockets, I have
some instructions on my web page here.
Your goal for fin materials: strong, waterproof, light, and aerodynamic.
That said, you can use corrugated plastic boxes, old broken CDs, credit/gift cards, balsa wood, styrofoam... the list goes on and on.
I personally have been using laminating plastic. I take the thickest laminating sheet and send it through the laminator without anything inside it. Then I take it out and put it inside of another sheet and run it through again. I end up with 4 layers of clear laminated plastic. I then cut them to the shape I want and heat up the end I want to glue to the rocket. when it gets hot enough, I bend 1/4" of an inch over at a 90 degree angle. This gives me plenty of surface area to glue it to the rocket.
Joining the fins to the rocket:
Duct tape is the quickest and easiest thing to use, but it sure is
ugly.
PL Premium Construction Adhesive is what I use. Unfortunately
it takes a while to set up. You have to wait over night to use your rocket.
The good thing is that it is semi flexible after it sets up. This
is good because PETE bottles flex a lot. You should use some sandpaper
to ruff up the area that you will be applying glue to, so that it has something
to stick to because plastics are generally smooth and slick.
Fin skirts: Cut the top and bottom off of another bottle,
then tape or glue this to the nozzle end of your rocket. Glue your
fins to this "skirt" so that when your rocket gets damaged, you can take
off the fin skirt off and put it onto your next rocket quickly and easily.
Lawndart: If you make a rocket with no parachute, try duct taping a tennis ball the the nose. This will make your rocket last a lot longer.
Inertia cap over parachute:
A nosecone with a weight in it. It works on the principal of
inertia. At apogee the heavier nosecone wants to remain in motion
while the rocket slows due to air resistance. This makes it separate
and the parachute comes out of the nosecone. These work OK unless
you launch at an angle or it is windy and your rocket "weather vanes" into
the wind at apogee. If this happens, the nosecone stays on and your
rocket becomes a lawndart.
Air-speed Flap:
I personally have not used one of these so I have no advice for you.
But basically it is a spring loaded flap that is held down by the air rushing
past. When the rocket slows down and reaches apogee, the spring pulls
the flap up and releases the parachute.
Electronic:
There are different ways to use electronics to deploy a parachute.
Timers, light sensors, radio controlled, accelerometers, and pressure sensors
are some of the ways I have read about that you can use electronic deployment.
also see My Altimeter
Tomy Timer: named after the Tomy toy company
The insides of a wind up toy can by used to make a timer to deploy
a parachute. Here is
a video of one in use. You gut the wind up toy for it's mechanism.
Find something you can jam the gears with to keep it from running until
you pull the jammer out. (I use the end of a cable tie.) Tie the jammer
to a string and tie the other end to your launcher so that when it launches,
it pulls the jammer out and starts winding down. Drill a small hole
through the winder knob. Make a "pull pin" to put through that hole and
tie a string to it. (I used a paper clip for the pin) Tie a piece
of elastic cord to the pull pin string. Tie the elastic to your rocket
so that when you pull on the pin it stretches the elastic before you put
the pin in the wind knob. The string should block the parachute from coming
out until the pin pulls away from the knob. You need to glue the
mechanism to your rocket. Make sure you don't get any glue on your
gears.
My design is a tube that sits on top of the rocket. I put the
tomy timer on the inside. I cut a few holes to access the jamming
hole and to stick the winding knob through. I cut an oval out for
the parachute compartment and I tape in a section of plastic bag to make
a pocket for the parachute to sit in. I also make a door to close
over the chute and tape it on at the bottom to make a hinge.
. 
You can make a two stage rocket using a staging device that operates off pressure from your rocket. It is relatively easy to make. Bruce Berggren has a description on how to make one.
Using a nozzle can dramatically change the way your rocket performs. I have used some "tee" nozzles on my FTC rockets. A tee nozzle is one that sits inside of the rocket on top of the launch tube. When the rocket comes off the launcher the nozzle is forced to the bottom of the bottle and it tries to exit the neck of the bottle. Only you have an o-ring to stop it from coming all the way out. The remaining water has to come out of the hole in the nozzle. This makes the acceleration phase longer. The size of the hole controls how your rocket accelerates.
