How to decide you are supposed to cower or flee from panicked?

Question

So we are out on a small boat (holds 3 people). Two bunyips attack us and I naturally failed the will save, I am now panicked.

Panicked

A panicked creature must drop anything it holds and flee at top speed from the source of its fear, as well as any other dangers it encounters, along a random path. It can’t take any other actions. In addition, the creature takes a –2 penalty on all saving throws, skill checks, and ability checks. If cornered, a panicked creature cowers and does not attack, typically using the total defense action in combat. A panicked creature can use special abilities, including spells, to flee; indeed, the creature must use such means if they are the only way to escape.

Now, I am a sphere of power caster who has the warp sphere, meaning I am able to teleport within close range, or spend a spell point for medium.

The DM decided that due to this ability, I was required to flee from the boat into the cold water, where I failed my fort save and became stunned, which caused me to sink for 6 rounds. I then failed to swim all the way back up before running out of breath and failed my first con, which killed my character.

To me, fleeing the boat would have only taken me into more danger because that is where the monsters are.

So in a case like this, which was the correct choice?

Answer 1

The GM may decide a panicked PC's actions

I have to assume the bunyips remained in the water and didn't actually enter the 3-person boat that you and the rest of your party were using. With this in mind, when your PC became panicked, this GM would've asked you—the player—what your character would do. If you'd've told me, "I paddle away from the bunyips as fast as I can!" or, "I head to the back of the boat and cower," I would've been fine with either. The PC—surrounded by icy water, possessing no ranks in the skill Swim, unable reach land with his magical warp abilities—is getting as far as he can from the fear source without putting himself in even greater danger! That seems reasonable to this GM.¹

However, that's not the decision your GM made… and that's okay. The condition panicked is deadly—essentially removing player agency and putting the PC on a tight script—and open to interpretation. While the condition panicked usually just exiles the stricken creature from combat for the duration (which it does, too, if your PC is stuck rowing or cowering, by the way), the condition can also cause the stricken creature to do dumb stuff… like use his magical warp abilities to get some distance from his foes, even if that means his magical warp abilities plunge him into the icy water. Honestly, that doesn't seem a reprehensible decision on the GM's part.²

Seriously, you have my sympathy—I'd grouse, too, were a GM to make such a ruling about my PC—, but I can see where the GM's coming from.

The icy grip of watery death: How a house rule killed your PC

The real issue is your PC's interaction with the cold water. Officially, the coldest mundane water only deals 1d6 points of nonlethal damage per minute… and there is, so far as I'm aware, no chance of a creature being stunned upon entry. (This sounds like the GM's house rule for verisimilitude. Is the GM a firefighter or forest ranger?) Aquatic Adventures has a sinking creature descend at 10 ft. the first round, 20 ft. the second round, and 30 ft. each round thereafter. Your PC's 6 rounds of sinking not only exhausts 6 rounds of the PC's air, but also he recovers from being stunned when he's 150 ft. underwater.³

So if your PC's Constitution score is low and his Swim skill check modifier a negative, you can pretty much tear up your character sheet right there: to reach the surface the typical nonaquatic creature must succeed on 10 Swim skill checks… that have DCs anywhere from 10 to 20.⁴ (The typical creature can hold its breath for twice its Constitution score then starts making Constitution checks to avoid drowning. That is, only lucky or cowardly PCs adventure long with, like, Con 8, but if your dice hate you or your PC has a penalty on Swim skill checks, your PC will fail a couple of those Swim skill checks, and every 2 failures means your PC's Con needs to be 1 point higher before needing to succeed on a Con check or else probably die.)

Before making your next character, ask for the GM to clarify the house rule on cold water stunning. That house rule killed your PC. Had your PC not been stunned, his first failed Swim skill check would've only seen the PC go under (and probably not far under) rather than sink like a stone. Also, when making your next character, keep this tragedy in mind; if the GM views the condition panicked as an excuse for creatures to engage in folly, you may be able to use that to your next PC's advantage.

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¹ Although, were the bunyips to have boarded your vessel, I'd've, like your GM did, ruled that your PC uses his magical warp abilities to flee the scene into the water.
² Has the GM billed the campaign as particularly challenging? That is, are you playing Pathfinder on hard mode?
³ Are you playing a published adventure? Perhaps the rules for icy water are contained therein? Ask the GM.
⁴ Tell me your party didn't take a 3-person boat onto icy, bunyip-infested waters during a storm. O, right—you're adventurers. Never mind.

Answer 2

I think your answer is right in the quoted text of your question, specifically as emphasized:

A panicked creature must drop anything it holds and flee at top speed from the source of its fear, as well as any other dangers it encounters, along a random path. It can’t take any other actions. In addition, the creature takes a –2 penalty on all saving throws, skill checks, and ability checks. If cornered, a panicked creature cowers and does not attack, typically using the total defense action in combat. A panicked creature can use special abilities, including spells, to flee; indeed, the creature must use such means if they are the only way to escape.

You were:

• Not cornered, you were literally able to flee in any direction.
• A spellcaster with a teleportation spell.
• Not reasonably able to flee on foot.

To force you to use your spell when you could decide to just dive into the water was possibly a little outside of the GM's leverage, but you would have ended up in the water with similar results regardless. The only difference is that your allies might have been able to get you if you were closer, maybe.