Scrub potatoes. Cook in boiling water 25 minutes or until tender. Drain and cool slightly. Peel potatoes, and cut into 3/4- inch cubes. Set aside to cool completely.
Combine chopped eggs, mayonnaise, onion, celery seeds, salt, and cooled potatoes in a large mixing bowl; toss gently to mix. Set aside.
Cook bacon in a large skillet until crisp; remove bacon, reserving drippings in skillet. Crumble bacon, and set aside. Add vinegar, water, and sugar to pan drippings, stirring well. Cook mixture over medium heat until sugar dissolves. Add potato mixture, mixing well. Cook until thoroughly heated. Sprinkle with reserved bacon. Serve hot.