Ericka,
We have a tankless heater - it's been 2 years plus now. And it works great. We also have a solar water heater that "supports" it. So, our water heating bills (if they were broken out that way) are low. The one thing that makes a lot of difference in actual water used, however, is that we have a recirculation pump (don't know about adding one of these after the fact). So, when I want to take a shower, I turn on the pump, get my clothes, towels etc, and by the time I turn on the shower, the water is warm (even though our shower is about the farthest thing from the heater).
We really like it - and I like the fact that I don't have this water storage "thing" in my garage. Ours sits on the wall.
If you have more questions, please feel free to ask...
Christina