The idea is that the two hitmen were miraculously saved when the bullets from the "hand cannon" mysteriously didn't hit them (though there were bullet holes in the wall directly behind them.)
Jules recognizes that it was a miracle, takes it as a sign from god that he should repent--a second chance at a virtuous life.
Vincent is having none of it. "Water into wine", which is a reference to one of Jesus' miracles in the New Testament, is Vincent rejecting the idea that it is a miracle.
"All shapes, all sizes" is probably Jules saying that miracles can take many forms.
Vincent gets upset because he doesn't want to change his life, and the idea that a higher power may be pulling the strings is upsetting, possibly because the implication that we aren't in control of our destinies.
It's worth noting that redemption is a major theme in Pulp Fiction.
The "mcguffin" in the briefcase is understood to be Marcellus' soul. He does get it back but has to suffer grievously. (Suffering and redemption are closely related, as in the story of the crucifixion. Note than in Marcellus' case, the ordeal is something he would find deeply shameful. This is surely no accident, as his introduction in the film involves lecturing Butch on not giving into pride when he steps into the ring to throw the fight. Marcellus is humbled by his ordeal and can therefore be redeemed, as redemption in this context requires humility.)
Butch is redeemed after his betrayal of Marsellus by making a moral decision to save Marsellus, even if it means he may be sacrificing himself. (His decision shows that he is able to fulfill the precept "love thine enemies", and receives forgiveness for his own transgression.)
Vincent refuses to repent and continues his life of crime. Unredeemed, he dies by his own gun at the hands of Butch while taking a crap. (Note that bad things seem to happen for Vincent when he is in the bathroom, probably a reference to his heroin addiction--junkies are notoriously constipated and often use bathrooms to surreptitiously shoot up.)
