What's the deal with showering on yom tov? I am asking not about shabbos, but specifically about yom tov.
Using the hot water itself is no problem. Some poskim say to use liquid soap (to avoid memareach, smoothing), although I believe that R. Moshe Feinstein did not even allow liquid soap. Some say to avoid squeezing the water from your hair, although R. S.Z. Auerbach allowed drying hair directly into a towel.
My rov told me that showering is yontif is muttar, and kol shekein (all the more so) on yom tov sheini. He said that you have a two or three-day-yontif, and are trying to be "machmir" and refraining from taking a shower, then you are being oveir on bal t'shaktzu and not showing kavod to other human beings. Especially with all that dancing on Simchas Torah!
edit: Also, according to the opinion that permits electricity on yom tov, you could also use a hair dryer to dry your hair, which would get rid of the potential problem of using a towel.
here's an audio from Rabbi Nissan Kaplan of Mir Yeshiva, Jerusalem
goes through the whole sugya down to halacha http://ravkaplan.dafyomireview.com/aud/5772-Halacha/5772-20-shower_on_yom_tov.mp3
To put it simple, it's not simple. There's many issues you need to be aware of. Rabbi Shmuel Lesches, a Rabbi in Melbourne, put together an in depth article about showering on Y"T, including a checklist for what you need to know to take a shower. In order to understand the reasoning and opinions behind the checklist, read the (long) section about showering in the linked magazine.