I suggest you head for ArcGIS. Given the point that they are soon to get a very powerful enviornmental modelling language incorporated into it. This tool is very well proven and is something that all of us can look forward to.
However, in terms of the cost factor, I suggest MapInfo, though hydrological modelling capabilities may be poorer in it. A very cheap solution to this end is the combined use of ILWIS (www.itc.nl) and PCRaster (www.pcraster.nl). ILWIS will enable all image processing and GIS while PCRaster is very well proven for hydrological modeling.