There are a lot of ways you can hide the water damage marks on your walls. The best way of hiding those ugly marks is to get a picture and hang it on the wall covering the entire area. Your visitors will come and see an artistic accessory to your home décor without any idea of the ugly face that hides behind the masterpiece.
You could also go for an added fabric in order to hide the stained part of the area. This can be a good idea if the area that is affected is in the ceiling. It is not possible to hang a picture on the ceiling so fabrics are the best option. If the ceiling is damaged almost entirely by water, the best thing you could do is get wallpaper attached to the area. They can look very good and will hide the ugliness completely.