A couple of people have posted about various differential breathers so I felt I should post up some of the many and varied options. 99.9% of anything you do to upgrade the rather poor factory breathers that come on your differentials is going to accomplish what you want to do: keep water out of the differential. The other .1% isn't worth mentioning, so I won't. Yes, you do also have a breather on top of manual trannies, too, and this can be treated the same way.
A couple of things you want to keep in mind:
The differential needs to breath
You don't want water in it caused by water crossings that stick your differential under water, usually when it is hot
You can get as fancy or as low tech as you like. You can cap the hose with something fancy like a cute little air cleaner mini K&N thingy (I did this on my heap on the front), a one way valve (I don't like these for some reason), or a cheapo fuel filter....or, even cheaper yet, simply run the hose up and then turn the end down a bit, which is what I did on the back of mine. Hose doesn't matter too much as long as it flexes and is long enough.
For Yota guys, the big vacuum fitting found on the plenum of any older EFI engine is set up like a long hose fitting and has the exact same threads as the axle breather. They are all over junk yards. For American rigs, a quick trip to Depo or Lowe's will get you set up in either the plumbing department or the irrigation department. Also on a lot of American made rigs, the differential breather is actually an "axle" breather and is set up off the axle tube rather than the differential. It does the same thing...
Since there are so many variations, I will post a bunch of pictures...and links.