I’m going to rearrange this a little. When you’re talking about any armor being good for its purposes, you’re talking about designs that will effectively resist the varieties of abuse most likely to be encountered in its intended role.
For combat armor, you’re talking about equipment that can withstand, at least, a couple solid hits from whatever weapons the enemies are using. Ideally, you want it to withstand a lot of solid hits, but nothing’s perfect, especially when bullets are involved.
When you’re talking about riots, the immediate threats are blunt force attacks, improvised weapons (tire irons, hammers, chairs, whatever the rioters could grab off the street quickly), and thrown projectiles (flaming or otherwise). It may also be a good idea to protect against weapons your own people will be using in the riot that have a good chance of affecting friendlies. So, chemical protection (usually a gas mask) and possibly some variety of ear protection (if you’re using sonic pacification weapons.) (And, yes, those do exist.)
You might see riot gear rated to take a couple bullets, but it’s not the norm. Sustained gunfire is fairly unlikely in a riot, so you’re not going to be designing gear on the off chance that a rioter might have a rifle.
There’s an element of abstraction here, but I’m going to run with it anyway: The more a piece of armor protects against, the heavier it gets. This isn’t 100% true, and new materials can significantly lighten the load, but the basic idea holds.
Extending the same abstraction a little, the heavier the armor, the more it covers, the more it will slow down the wearer and limit their mobility. Full riot gear aims to protect as much of the wearer as possible. I’m not sure exactly how heavy and bulky riot gear is, but weight and bulk are very real considerations. This is part of why riot armor is less likely to incorporate ceramic plates, or other methods, to deal with rifle fire. That’s not the threat it’s designed to deal with. Also, it would raise the cost of the gear. I can’t say exactly how much, I don’t know, but it means you’re better off gearing your forces to face the threats they’re most likely to face, rather than all possibilities.
Now, fair warning, it’s entirely likely there is riot armor out there, available for sale, that incorporates ceramic ablative plates or other means, to soak off a couple rifle rounds, you’re just not as likely to see it in the hands of a local police department.
When you’re in water, armor is a problem. This isn’t just riot gear, it’s any heavy clothing. Once it becomes waterlogged, it weighs you down. This massively increases the issues with mobility I mentioned earlier, and can easily create a situation where you cannot swim at all. So, no, in water, riot armor is potentially fatal to the wearer, particularly if they can’t get out of it or get to the surface quickly.
In answer (or more accurately “non-answer”) to your question on versatility: that’s more of a balancing act. Armor designed to offer more protection, against a larger range of threats will (usually) weigh and cost more. It depends on what your character’s organization can afford, paired with the specific kinds of situations they’ll be dealing with. If you’re asking about a character who’s operating in some kind of assault role, then riot gear is not the answer.
Also, in spite of it being used that way on TV and in films, riot armor is not something that will let you walk through a hail of bullets. To the best of my knowledge, there really isn’t anything like that you can wear. You can have that effect with vehicles, but it’s not quite the same thing.