The lowest minimum-energy structures for the water octamer, nanomer, and decamer and the hydration of iodide were characterized using molecular dynamics techniques and polarizable potential models of Dang and Chang [J. Chem. Phys. 106, 8149 (1997)]. The calculations predicted the two lowest-energy cubic isomers, D-2d and S-4, for the water octamer. The lowest minimum-energy structures for the nanomer and decamer were derived from the octamer by insertion of one and two water molecules, respectively, into the cubic isomers. Our potential models provided an excellent description of the hydration of iodide in water clusters and in solution at room temperature. At 0 K, the lowest energy-minimum structures predicted by our calculations are in excellent agreement with the available optimized structures obtained from accurate electronic structure theory calculations for similar systems. In all cases, the surface states are dominant and the polarizability plays an important role in the hydration of iodide in water clusters at 0 K.