There are many water towns around Shanghai that make for wonderful day or weekend trips, and I highly recommend visiting some of them, but if you're short on time and want to see a small, lovely water town that has been absorbed into the sprawl of Shanghai, Qibao is your choice. It makes for a perfect half-day trip, so you can get out to see the water town in the morning, have lunch, and then get back into the main part of the city to explore some more sites in the afternoon and evening. The best part? It's all accessible by subway (metro line 9: Qibao stop). It takes about 45 minutes to get to the Qibao stop from Pudong (and less if you're already on the Puxi side of the river).
The last time we went to Qibao, we caught the subway around 8:30 and spent the morning wandering through the tiny streets and around the temple complex. We snacked on various street snacks (including some delicious sweet dumplings filled with custard) and had lunch in a lovely, simple restaurant along one of the canals.
When you get off the subway (metro line 9, Qibao stop), take the #2 exit and then turn right onto the big street when you get above-ground. At the first major intersection, take another right and follow signs for the old town. It only takes about 5-10 minutes to walk to the site of the old water town (which was once part of the Grand Canal and dates back 1,000 years!). Qibao was built in the Northern Song Dynasty (960-1126) and grew into a prosperous business center during the Ming (1368-1644) and Qing Dynasties (1644-1911).