Make a billboard mesh to use for your object and use a script with Transform.LookAt to make it look at the camera in every Update.

As for doing sprite animation, search for sprite animation. (You'll probably find that putting all the animation frames into a single texture and using UV offsets to animate is a more common method to use than using separate images.)

This assumes you've put everything onto a texture atlas and you have 64 frames of animation... I wrote this while mildly drunk, and you'll need to put a transform.LookAt(camera.position) sort of dealio on it. I'm sure you'll figure it out :)

You could easily make this work with any number of frames.

private var frame = 1;
private var xOffset = 0.0;
private var yOffset = 1.0;
private var waterMat : Material;
private var on = true;
function Start()
{
    animWater();    
}

function animWater()
{
    while (on)
    {
        // Offset the X
        xOffset += 0.125;

        if (xOffset>0.99) // if it goes over one, return carriage :P
        {
            xOffset = 0.0;
            yOffset -= 0.125;   
        }

        if (frame>62) // Max number of frames reached
        {
            xOffset = 0.0;
            yOffset = 1.0;  
            frame = 0;
        }
        frame ++;

        renderer.material.mainTextureOffset = Vector2(xOffset,yOffset); 
        yield;
        }
}