Hi again hempgirl
Adding organic material to your soil will indeed increase its moisture-holding ability. Its other chief benefit is that it improves soil structure; if you have a heavy (clayey) soil it will lighten it, if you have a light (sandy) soil it will add bulk. Basically, it's a good idea no matter what kind of soil you have.
(also BTW mulch is a covering of organic material *over* the soil, when it's *in* the soil it's called...uh...organic material.)
Do be careful with the watering however, because if you have high amounts of organic material you many not need to water for long periods. (My plants are in almost 100% organic material and I haven't watered them in almost 2 months.) Just make sure to only water them when they ask for it and not on a schedule.
good growin'
Organic