Warnock said: "It was very pleasing for my 100th game, we played some good stuff, got some good goals and created chances today.
"I asked Victor to go and win us the game before the match, and he helped to do that by taking his chance very well.
"He should be in the Premier League now, he'd set it on fire and he'd probably find it easier there. In the Championship it's a bit more muck and nettles.
"We have a small squad, so we need the team spirit to be very good and the lads are giving me everything.
"If the penalty had gone in, things might have been different though."
Watford manager Malky Mackay said: "Letting in the two early goals was a real blow.
"Then we had the chance to get back into it with the penalty, once that misses maybe your chance has gone.
"And certainly after the third goal, it was going to be very difficult.
"Palace may not be able to spend big on players, like us, but if you looked at their team today they had played a lot more games than my lads at this level."
Warnock made just one change to the side which drew 1-1 with Coventry last weekend, with Moses replacing Freddie Sears, who dropped to the bench.
Jon Harley was recalled to the Watford side in place of Don Cowie, who was missing with a calf injury sustained in training.
The recalled Moses tested visiting goalkeeper Scott Loach in the opening minute.
And a minute later the youngster put Palace ahead as he latched onto a long clearance from Speroni and beat two defenders before firing a low shot into the bottom-right corner.
Palace extended their lead in the sixth minute as Lee headed home a hanging right-wing cross from Butterfield.
Shaun Derry then fired wide from distance and Neil Danns volleyed over the bar from 12 yards as Palace continued to dominate the opening period.
Watford finally managed a shot of their own shortly after the half hour, but Henri Lansbury's 25-yarder sailed past Speroni's left-hand post.
The Palace stopper was called into action soon after to save a close-range header from Graham, while at the other end Loach kept out a similar effort from Lee.
The Hornets were handed a golden opportunity to level on the stroke of half-time when Lee brought down Lansbury in the penalty area, but Speroni produced an outstanding save to keep out Graham's spot-kick.
Palace then wrapped up the points nine minutes after the interval as Darren Ambrose twisted and turned before beating Loach from 18 yards.
A miserable day for the Hornets was completed in injury-time as Tom Cleverley's shot struck the post.