The big debate about water vapor is
this versus http://www.climate2003.com/blog/arking.htm
You can also see it in this quick and dirty way:
If the Earth heats up more due to the enhanced greenhouse forcing then this heating will be strongest in the lower atmosphere, where most greenhouse gas is and it's closest to the source, the infrared radiating heat.
Too bad for the global warmers that this heat is not showing in the radio sondes temperature registration that measure exactly that area of the atmosphere, but anyway.
So if more infra red radiation is captured directly in the lower atrmosphere, the higher part of the atmosphere receives less IR radiation that the greenhouse gasses can capture and heat the air with. The cooling is actually occurring but no-one knows exactly why. Cooler upper air means less water vapor in the air and more condensation - hence clouds. Furthermore a higher vertical temperature gradient in the atmosphere means unstable conditions, convection and even more clouds forming. More clouds is probably having a negative feedback effect, more incoming solar radiation is reflected and there is less solar energy to capture with the greenhouse gas effect. So water vapor may have a negative feedback although it is the strongest greenhouse gas.
Are there examples of that negative feedback?
Perhaps. Try the paleao glacial confusion thread. We see two very wet era's (the Bolling Allerod and the Preboreal) with simulatenous massive glacier growing. Hence not that much warming despite the very moist conditions.