Not so fast with just removing a wire. It sounds like you have an existing 220 volt line and outlet and want use a 120 volt water heater at the other end. Does the water heater has a three prong plug or does it need to be hard wired?
In the existing circuit you should have four wires, black (110v line) white (neutral), red (110 volt line), green or bare copper (ground). In the circuit panel remove the 220 volt breaker. Cap off the red wire and tuck it away for future use. Get two single phase breakers (110v). Connect the black wire on one of the breakers (14 gauge must use a 15a, 12 gauge use a 20a). The other breaker install it in the empty slot and mark it as a spare.
At the other end remove the 220 outlet, cap off the red wire and tuck it away. Connect the black, white and ground as any other 110 volt outlet. Be sure to get a 20 amp outlet that cost a few dollars, not a 59 cents 15 amp one if it is a 20a circuit. If it is a direct wire heater connect the three wires as instructed from the units directions.
What is accomplish is it is the safest method since anyone in the future knows what they are looking at and no questions. Just removing a wire at the breaker panel and grounding it, might cause you to have a reverse power connection at the water heater and probably would trip the breaker or worse yet have a hot chassis if the old wiring doesn't have a ground if you're using PVC water pipes