We report molecular dynamics simulations of bilayers using a united atom model with explicit solvent molecules. The bilayer consists of the single tail cationic surfactant behenyl trimethyl ammonium chloride (BTMAC) with stearyl alcohol (SA) as the cosurfactant. We study the gel to liquid crystalline transitions in the bilayer by varying the amount of water at fixed BTMAC to SA ratio as well as by varying the BTMAC to SA ratio at fixed water content. The bilayer is found to exist in the tilted, L-beta' phase at low temperatures, and for the compositions investigated in this study, the L-beta' to L-alpha melting transition occurred in the temperature range 330-338 K. For the highest BTMAC to SA composition (2:3 molar ratio), a diffuse headgroup-water interface is observed at lower temperatures, and an increase in the d-spacing occurs prior to the melting transition. This pretransition swelling is accompanied by a sharpening in the water density variation across the headgroup region of the bilayer. Signatures of this swelling effect which can be observed in the alkane density distributions, area per headgroup, and membrane thickness are attributed to the hydrophobic effect. At a fixed bilayer composition, the transition temperature ( > 338 K) from the L-beta' to L-alpha transition obtained for the high water content bilayer (80 wt %) is similar to that obtained with low water content (54.3 wt %), confirming that the melting transition at these water contents is dominated by chain melting.