We had one of these in our old house, We put it in few months after we bought the house. The old tank style one had filled up with crud, and you could only take about a 2 minute shower. I wasn't paying the gas bill then, so I don't know how much it saved in gas use, but I loved being able to take nice long showers. Plus, the unit takes up much less room then a tank style. Installed it myself, no trouble at all. Ours was this unit:
http://www.controlledenergy.com/html/aquastar/design_features.html
The only problem we had, was we got one that has too low of a flow rate. The water here is at about 50F, so to get it hot enough, we had the heater cranked all the way up, so it cut the flow rate down to about 2 GPM, which is about half what the cold flow is. I see they have a newer one, that can do 3 gpm at maximum temp rise. We will most likely get one of those when our current tank type one craps out. (New house came with a tank type)
Other then that, we used it for about 3.5 years, with absolutly no trouble.
I think they are the best way to go for water heaters.
Oh yeah, mine was a gas unit.
RedLance