How does a hole's size affect the distance that water will squirt
I believe the physically relevant parameters here are: 1. internal pressure P at the bottom of the bucket but not too close to the hole, units [$kg*m^{-1} s^{-2}$], the fluid density $\rho$ [$kg*m^{-3}$], hole area $A$ units $m^2$, and viscosity $\eta$ $kg m^{-1} s^{-1}$. First, let's ignore the viscosity, and find which combinations can give us a velocity, units [$m/s$]. The unique combination is $\sqrt(P/\rho)$, and so in the limit of vanishing viscosity the velocity will be independent of the hole size. Now if we add in viscosity, there is a dimensionless combination available, $\rho \eta^2 P^{-1} A^{-1}$. We could have any function of this dimensionless ratio, but common sense tells us that at least in the limit of small $\eta$ it should be a decreasing function, since viscosity should take kinetic energy away from the fluid. From this ratio we see that decreasing the size of the hole is equivalent to increasing the viscosity, and thus the smaller hole should have a smaller exit velocity than the bigger one. I guess this is a long-winded way of saying the big hole will have higher Reynolds number and be less effected by the viscosity.
If the only forms of energy were the potential energy of the water in the bucket and the kinetic energy of the escaping stream, then by conservation of energy the velocity of the stream would have to equal $\sqrt{2gh}$, where $h$ is the difference in height between the hole and the surface. Since you observe that $v$ (or at least the component of $v$ parallel to the axis of the flow) depends on other factors, it's possible that in your experiment, there were other forms of energy involved. Two possible candidates are: (a) frictional heat, and (b) the kinetic energy of the water flowing toward the hole. We expect effect b to be minimal or zero, both because the velocity of this flow is small and because this KE represents a reservoir of energy that is either constant or only very slowly changing as the water level drops.
Another issue is that kinetic energy is independent of the direction of motion, and the flow of the stream as it exits may not be entirely parallel, so the velocity of flow in the direction parallel to the axis of flow will in general be less than $\sqrt{2gh}$. The stream contracts significantly on its way out, so quite a bit of its KE is in the form of motion that's transverse to the axis. This leads to something called an efflux coefficient. There is a discussion of both the frictional effect and the non-parallel effect in the Feynman Lectures, section 40-3. The non-parallel effect can be quite large. Feynman gives some examples for different types of holes and discharge tubes, and the efflux coefficients are typically factor-of-two effects.
Another way to approach this is through conservation of mass. When you put your thumb over the end of a garden hose, the cross-sectional area $A_1$ of the aperture under your thumb is less than the cross-sectional area $A_2$ of the hose. Since water is being neither created nor destroyed, we must have $v_1/v_2=A_2/A_1$. This is the opposite of what you observed, and the two situations are not really analogous. They would be analogous if there was a piston pressing down on the surface of the water at the top of the bucket so that the level was constrained to go down at a fixed rate.
[Edited the above answer to improve it based on comments by Omega Centauri.]
user 1631 is correct in his/her thinking. It is based on Poiseuille's law.
Flow Q ~ (dP/dL)*r^4
where dP is the pressure differential across the small length L of the hole (imagine the hole had a small pipe of radius r. Now we know that dP/dL is same because it is the pressure difference in the (fluid - P_atm).
Therefore, Q is proportional to r^4 while velocity is Q/Area which is proportional to r^2, Therefore, higher velocity from a larger hole... Of course, I have left out the viscosity term in the proportionality equation. It should be always be there because it is viscosity that causes this effect as pointed out earlier by others. But it is a constant hence I just left it out as it goes away in ratioing.