While I don’t know for certain … there are a few possibilities.
PVC plastic contains plasticizers to keep the plastic from becoming brittle. There are several chemicals that are used for this but one of them is a group of chemicals called Phthalates and some of these (the low molecular weight pthalates) that were in common use (such as DEHP) are now known to cause health issues with long term exposure even at low levels. Many countries have either banned them or are in the process of banning them and manufacturers are replacing them with less hazardous chemical alternatives.
Many waterbed conditioners contain plasticizers to “condition” the plastic and maintain the level of plasticizers which can prevent the vinyl from becoming brittle and this could be causing the release of VOC’s from the vinyl.
Heating vinyl can also cause chemical changes in the vinyl which can also lead to the renewed release of VOC’s (volatile organic chemicals).
It’s possible too that opening the cover has led to the release of a concentration of odors that were trapped inside.
This could also be connected with bacterial growth but this is usually accompanied by a “slime” inside the bladder or tubes and usually has a different smell.
While I don’t know for certain what your mattress smell is coming from … considering that it’s 20 years old the odds are higher that it contains DEHP or other low molecular weight Phthalates in the vinyl in which case it could be harmful yes.