Aqueous N-methylacetamide solutions were investigated by polarization-resolved pump-probe and 2D infrared spectroscopy (2D IR), using the amide I mode as a reporter. The 2D IR results are compared with molecular dynamics simulations and spectral calculations to gain insight into the molecular structures in the mixture. N-Methylacetamide and water molecules tend to form clusters with "frozen" amide I dynamics. This is driven by a hydrophobic collapse as the methyl groups of the N-methylacetamide molecules cluster in the presence of water. Since the studied system can be considered as a simplified model for the backbone of proteins, the present study forms a convenient basis for understanding the structural and vibrational dynamics in proteins. It is particularly interesting to find out that a hydrophobic collapse as the one driving protein folding is observed in such a simple system.