The correct response is: The particles gain both potential and kinetic energy.
As water is heated, its temperature increases, which increases the kinetic energy of the particles. When the water reaches its boiling point and begins to turn into steam, additional energy is absorbed in the form of heat (latent heat of vaporization), which increases the potential energy of the particles as they move further apart and transition into the vapor phase. Thus, both kinetic and potential energies increase during this process.