Hi Mohan,
1. I don't. I thought this was going to be more of a problem, but it's OK to let it get wet. It only needs to be kept dry while its healing: two or three days. I just clean it with an alcohol pad after every shower, and let it air dry. I don't even cover it with a bandage any more, though I don't recommend that necessarily.
Make sure the wires don't get caught or pulled on. One of the most common complications during the clinical trial was broken wires or wires that were pulled out. The doctor can fix it, but it's something you want to be careful of. Make sure the connector holder bandage thing is secure every day, and the connector is properly seated in it. A couple times I've had the connectors come loose from the bandage, and the cable pulls on the wire exit sites. Ouch!
2. Yes, this is recommended. Sometimes I forget. Supposedly this can cause choking.
-Tom