My initial thoughts on what would happen were pretty wrong- though once I saw the video it made total sense. Our minds are obviously not primed to understand physics in weightless environments.
from the video description:
"CSA Astronaut Chris Hadfield performed a simple science experiment designed by grade 10 Lockview High School students Kendra Lemke and Meredith Faulkner. The students from Fall River, Nova Scotia won a national science contest held by the Canadian Space Agency with their experiment on surface tension in space using a wet washcloth."