I think both practises are about the same. In western countries where paper is abundant, we use toilet paper because the thought of touching our own waste is repellent to us. However, the truth be told, we still manage to get our hands "contaminated" with our own waste products on occasion. In places where paper is not so abundant, people have adapted the practise of using water only to cleanse the area; then, washing hands thoroughly. Environmentally much better as many thousand (million?) pounds of toilet paper are not flushed yearly.
I believe the two practises evolved due to the abundance or lack thereof of paper; and, the cost of that paper.