There're various ways to get to Xitang. There're departures by coach from the Shanghai Stadium, but this method though more hassle-free, is slightly more expensive, and the timing is also inflexible. My recommendation is to take a bus/train to Jiashan, then change to a taxi/minibus to Xitang.
For bus, you'll need to go to Shanghai South long-distance bus station, located just to the south of Shanghai South train station, reachable via the same metro stop, just follow the directions after getting out of the metro stop. Buses to Jiashan cost 30 RMB, take 1 hour and leave every 20-40 mins 0700--1830.
It's also possible to get to Jiashan by bus from Nanjing/Suzhou/Hangzhou.
For train, head to Shanghai main train station, Shanghai South train station or Shanghai Hongqiao train station. The 1st is reachable on metro lines 1 (red), 3 (yellow) and 4 (purple), name of the metro stop would be Shanghai train station. The 2nd can be reached on metro lines 1 (red) and 3 (yellow), the name of the metro stop would be Shanghai South. The 3rd is reachable on metro lines 2 (green) and 10 (lilac). The latter 2 stations are very much newer, cleaner and easier to find your way around; only drawback is that they take a bit longer to get to from a central location eg People's Square. Train would cost around 13-77 RMB depending on your choice of train and type of seat. The cheapest of the lot, K trains, depart from Shanghai South train station.
The only useful Shanghai -- Jiashan train: G7361 (0750--0835, 45min)
Shanghai South -- Jiashan trains: K8371 (0601--0644, 43min), K8457 (0643--0737, 54min), K1185 (0906--0949, 43min), K751/K754 (1250--1333, 43min), K759 (1611--1654, 43min)
G trains leave from Shanghai Hongqiao train station to Jiashan South train station, from which I don't know the logistics of getting to Xitang, so I've left those out for now.
Train schedules have been updated as of 22nd April 2011.
Minibuses ply between Jiashan and Xitang on a 5-min frequency so don't worry about getting on one of those. The trip takes about 20 mins and cost is 4 RMB. There's also a public minibus for 2 RMB but I forgot the number of the bus! Takes about 10-15 mins longer on those though.
Or, easier for most non-Chinese-speaking travellers, a taxi to Xitang water village will cost about 20 RMB/taxi, 30 RMB/taxi at most.
Hiring a boat is a nice way to see (and get seen by) Xitang . The price is not so cheap. But there is a lot of place on the boat. So if you talk a bit with other people who are standing around the boats ,you can hire it together and devide the price.
The interesting part of the city is its old town part, small enough to walk around, if you have plenty of time, try to take a boat tour rowed by local people, very pleasant.
Local people do bike even under the covered riverside stone streets, but you need to learn how to move your bike over the arched stone bridges first - just follow what the locals do! :)
There are weekend buses from Shanghai Stadium Tourists Dispatcher Center every morning to Xi Tang; also daily early morning buses from Shanghai People Sq to Xi Tang. Otherwise, many trains from Shanghai to Hangzhou direction will stop at Jia1 Shan4 (the county seat of the county where Xi Tang belongs to), then take bus to Xi Tang.
Or hire a taxi or drive your own car from Shanghai by freeway.