the other option is going electric, but anyways. since the motor sits kind of high i'd look for a lighter motor, and since the prop isn't running in the water you won't need an extremely powerful engine, but you will something with decent rpm, and you won't need a huge engine. a .15 would move that thing along just fine, and i'm sure you weren't looking to sink a ton of money into this, so a decent .15 would probably move along just fine.

as for servos why not use what you have and see how it works? you probably won't need really fast servos, but you may need some torque.