We address several inter-related aspects of underwater network design within the context of a cross-layer approach. We first highlight the impact of key characteristics of the acoustic propagation medium on the choice of link layer parameters; in turn, the consequences of these choices on design of a suitable MAC protocol and its performance are investigated. Specifically, the paper makes contributions on the following fronts: a) Based on accepted acoustic channel models, the pointto- point (link) capacity is numerically calculated, quantifying sensitivities to factors such as the sound speed profile, power spectral density of the (colored) additive background noise and the impact of boundary (surface) conditions for the acoustic channel; b) It provides an analysis of the Micromodem-like linklayer based on FH-FSK modulation; and finally c) it undertakes performance evaluation of a simple MAC protocol based on ALOHA with Random Backoff, that is shown to be particularly suitable for small underwater networks.