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Place the potatoes in a large pot and cover with water. Bring to a boil and cook until tender, about 10-15 minutes. Drain and let cool slightly. Peel and cut into bite-sized pieces.
In a large skillet, cook the bacon over medium heat until crispy. Remove the bacon and set aside, leaving the grease in the skillet.
Add the chopped onion to the skillet with the bacon grease and cook until softened, about 3 minutes. Stir in the vinegar, water, and sugar. Bring to a simmer and cook until the sugar is dissolved.
In a large bowl, combine the potatoes, crumbled bacon, and warm dressing. Toss gently to coat. Season with salt and pepper to taste.
Sprinkle with fresh parsley and serve warm or at room temperature.