Over the years that I have done business around China, I also had the pleasure of visiting a lot of unique and photogenic places. The water towns around the Shanghai, Suzhou and Hangzhou areas were some of my favorite photography subjects. Although many of these villages have since been commercialized into horrific tourist traps, there are still some hidden gems here and there. There are 8 famous water towns near Shanghai in total but I will only cover the five towns I have been to personally and provide my own photos for reference.
I'm too lazy to write a detailed recollection of the places, there's plenty of info online if you are interested. I will however, briefly describe my impression of each one.
Nanxun 南浔 - My personal favorite, least commercialized and well preserved.
Nanxun District (Chinese: 南浔区; pinyin: Nánxún Qū) is a district in the prefecture-level city of Huzhou, Zhejiang province, China. Nanxun Town (南浔镇), an old town, is located in the district. It is one of the most well-preserved old towns in this region and is known for its cultural heritage. Other towns in the district include Shuanglin, Lianshi, Linghu, Shanlian, Qianjin and Shicong. 
Zhujiajiao 朱家角 - One of the closest water towns to Shanghai but overly commercialized. My photos are from 2012 so it may be a bit outdated.
“Zhujiajiao (Chinese: 朱家角; pinyin: Zhūjiājiǎo; literally: "Zhu Family Corner") is an ancient town located in the Qingpu District of Shanghai. The population of Zhujiajiao is 60,000.
Zhujiajiao is a water town on the outskirts of Shanghai, and was established about 1,700 years ago. Archaeological findings dating back 5,000 years have also been found. 36 stone bridges and numerous rivers line Zhujiajiao, and many ancient buildings still line the riverbanks today.”