Get GWX 2.0
http://gwx.mysite.orange.co.uk/
and then get Torpedo Damage Final from here (This makes it look like you've blown realistic huge holes into ships with your torpedoes and when you hit with the deck gun, it makes realistic looking shell punctures on impact as well. This mod is a MUST HAVE. I'd never leave port without it !!!)
http://hosted.filefront.com/OceanBlue
You also don't want to leave port without Silent Hunter III Commander as well. It's a separate program that is a MUST for using milk cows in game and for enhancing game features.... plus it keeps a really cool war reccord for you. Make sure to download the GWX Silent Hunter III Commander config file from the GWX 2.0 site and copy it into the CFG folder in your Silent Hunter III Commander folder.
http://www.users.on.net/~jscones/software/products.html
That should pretty much set you up there