Replace Water Pump when replacing timing belt?

Yes, they should replace the water pump, tensioner, etc. You have an interference motor meaning that a broken belt bends valves and pistons which in effect kills the motor.

An old water pump can go bad, start to leak, or even worse the bearing in the pump can give out and lock up the pump and shred the belt. A bad tensioner can come apart and shred the belt. A shredded belt breaks and your motor is toast.