This is probably obvious to anyone who didn't grow up sanding cars, but you do not need to use a dribbling hose, or a 5-gallon bucket of water and a sponge to supply water for your sanding. In fact, unless you like drenched balsa, you don't want to. But you do need enough water on your paper.
You only need just enough water to float the paint dust away from the sandpaper grit as you sand. Frequently dipping the sandpaper in water, and frequently wiping down the airframe with a damp cloth or sponge will keep the sandpaper clear and the unpainted parts of the airframe dry.
Look at your sandpaper often -- if it's getting clogged you'll see the paint stuck to it, and you know you need more water.
The advise about 220 grit is good -- but I'm going to stop here, and before I write a treatise on painting, tell you to go out looking on the web, or ask for a pointer from someone. There's a whole art to this airplane painting thing, which would fill several books. Harry Higley's There Are No Secrets is probably a good starting point (and, I think, is still in print). Mark Scarborough's series in Stunt World is shaping up to be full of lots of good information, too. Beyond that, if you know anyone with a supply of back issues of Flying Models magazine, it seems that everyone who ever writes a construction article on a CLPA ship goes to great length on how to do a finish.
If you're absolutely positively averse to wet sanding, then use the finest dry paper you can find, and be ready to be happy with a flyable, fuel-proof airplane that looks like it looks.