***Update:** With the introduction of the ocean biome in beta 1.8, it is possible to play in a "water world" without needing to raise the sea level, by finding a seed which starts you in the middle of such a biome.  Seeds can be found wherever Minecraftians congregate, including [the official forums](http://www.minecraftforum.net/forum/50-seeds/) and [Reddit](http://www.reddit.com/r/minecraftseeds).*

Even with a world editor, you cannot flood "the whole world", because the world is [procedurally generated](http://www.minecraftwiki.net/wiki/World#Seeds) as you explore it.  The best you could get would be to flood the areas of the world you've already seen.

Instead, you should look for mods which affect world generation.  A quick search of [the mod forum](http://www.minecraftforum.net/forum/51-released-mods/) turns up the [Phoenix Terrain Mod](http://www.minecraftforum.net/topic/313991-173-phoenixterrainmod-website-back-up), which has a `waterLevel` setting (default 64) as well as many others which may help you achieve the effect you're looking for.