Penguins eat seafood. Their main diet is fish, though they'll also eat squid, small shrimplike animals called "krill" (see photo to the right) and crustaceans.
If you look closely at a penguin's bill you'll notice a hook at the end, perfect for grabbing dinner. They also have backward facing bristles on their tongues that helps slippery seafood from getting away.
Penguins don't live near freshwater -- at least none that isn't frozen. Instead they drink salt water. They have a special gland in their bodies that takes the salt out of the water they drink and pushes it out of grooves in their bill. A handy in-house filtration system!