Shivani - I saw the same technique on Nichole's blog. A "water pen" is like the aquabrushes that SU sells - a non-SU brand would be Niji or EK Success has them as well. I know you can get Niji brand at
www.dickblick.com - joann.com probably has the EK Success ones; I know they sell them in the store.
However, you can accomplish the same thing with a paintbrush dipped in water (the waterbrushes are just so nice and portable and harder to spill)
For the technique Nichole demonstrated, you would have to use dye ink - pallete or STAZ-on won't feather out nicely like the dye.