Minecraft wiki entry for Water_ladder, associated text: Due to the South/West rule, only water ladders facing south or west (user facing the water) will work.
As of Beta 1.4, only ascending a water ladder from a standstill on the ground will work.
Facing one of the corners of the water ladder also seems to allow it to function.
As of Beta 1.5, water ladders are still climbable, but require careful positioning to allow faster-than-normal vertical motion.
As of Beta 1.5, Minecraft will sometimes recognize the player as "in" the water causing an annoying delay to climbing ladders.
As of Beta 1.6, water ladders are harder to build, slower and more difficult to use, but still allow faster vertical motion than ladders.[1]