AngularJS : How to watch service variables?

You can always use the good old observer pattern if you want to avoid the tyranny and overhead of $watch.

In the service:

factory('aService', function() {
  var observerCallbacks = [];

  //register an observer
  this.registerObserverCallback = function(callback){
    observerCallbacks.push(callback);
  };

  //call this when you know 'foo' has been changed
  var notifyObservers = function(){
    angular.forEach(observerCallbacks, function(callback){
      callback();
    });
  };

  //example of when you may want to notify observers
  this.foo = someNgResource.query().$then(function(){
    notifyObservers();
  });
});

And in the controller:

function FooCtrl($scope, aService){
  var updateFoo = function(){
    $scope.foo = aService.foo;
  };

  aService.registerObserverCallback(updateFoo);
  //service now in control of updating foo
};