Not really, the picture is more complicated.
First of all, water retention is bad in a way. It give more work to your filtering organs like kidneys and leads to high blood pressure in the long run. So when Paleo detractors tell us that we surely lose weight on such a diet, but mostly from water loss, they're not completely wrong. But it's also a reason why we're healthier and live longer. Anything unnatural will be bad in the long run, and extra water to compensate for the salt is unnatural.
The second point is that sodium is an electrolyte and it's working in conjuction with other electrolytes to do its work. Ideally, those electrolytes have to stay balanced. The principal electrolytes are sodium, potassium, magnesium and calcium. Sodium is in close relation to potassium, and I know potassium is abundant on a Paleo diet, but I also think there is a reason why there is so much more potassium food than sodium, because we need much more.
Hope this helps
Get great paleo diet lifestyle tricks, recipes and cooking tips. My contribution to the paleo movement.