To be truthful, the excess water is intracellular...so it's not sitting outside your muscles like a waterbed. 95% of people that I have trained that have complained about bloating on creatine are not bloating from the creatine, but other dietary factors/supplements (like dextrose with the creatine right after working out).
Creatine works as such: For anaerobic work, there are two ways that muscles get energy, but both come from ATP. For very short bursts of energy, like that needed for a single maximum lift, ATP sheds a phosphate molecule, which releases energy in the muscle cell. ATP is stored in muscle cells, and under all-out effort, all muscular ATP can be depleted very quickly.
Creatine phosphate, which is also stored in the muscles, can replenish ATP by "donating" a phosphate molecule to depleted ATP, aka ADP. Once the ATP is replenished, it's able to go back to work again by releasing another phosphate molecule and a burst of energy. So, consider it like the "take a penny" tray at the gas station. It doesn't supersaturate your muscle for some water related reason that I've heard talked about in gyms. It simply provides an energy source to your muscles allowing you to continue intense workouts to break down your muscles (that build themselves up through rest and diet).
Going off of creatine won't "deflate" you, you may shed a pound or two, but you won't lose your gains as long as you continue to work out semi-regularly. Generally speaking from my experiences, the people that complain about deflating when off of creatine also stop working out when they go off creatine... then when the get motivated again and get back in the gym they start taking it again and get bigger...