I would consider tankless. Installed my first one in my last home (Bosch natural gas whole house model ~ $950) Tankless hot water heaters do not get the build-up on the inside as when no water is flowing, the heat shuts-off. Tank-type heaters on the other hand, are only as efficient as advertised on day one.
Well I looked into Bosch gas tankless and they have VERY mixed reviews out of 30 reviews at Amazon 11 are one star (lowest) 12 are 5 stars. I would avoid them on this alone Source:
http://www.amazon.com/Bosch-2700ES-...dp_top_cm_cr_acr_txt?ie=UTF8&showViewpoints=1 espeially when higher rated models are availble.
Second: Tankless DO get build up and require annual maintenance (depends upon minerals in your water), Source
http://www.ehow.com/way_5676144_instructions-tankless-water-heater-maintenance.html. It is fairly simple. you issolate the heater from your water supply (done by valves) then pump vinagar through it via a small pump for one hour.
Third: Tankless heaters DO NOT save you a great deal of money. Don't misinterpret this, if you have a nasty heater that is not clean and full of scale you will save, but then again you would save with a new tank style heater also. Here, rather than a link, you need to think of the logic, the vast majority of the energy consumed by the water heater is used to heat up the water, not in keeping it hot. Its just like boiling water on the stove, high to bring it to a boil, simmer to keep it at 212. That is not a complex concept. The actual gas savings from eliminating 'standby' costs are about 5 - 10%, not nearly enough to pay for the heater, if professionally installed in its lifespan of 20 years. Consumer Reports wrote a lengthy article about this and I have confirmed it firsthand myself
Having typed all of this I replaced a tank style heater with tankless because it replaced TWO heaters with one, I did it myself, I did not use a Bosch model, and I have a teenager who takes incredibly long showers. So it can make sense to install one, however be prepared to have a cold sandwich hot/cold/hot water shower on occasion unless you install a very small (3 - 6 gallon) electric water heater after the tankless model. If you are interested in the why this is needed, post here and I'll elaborate.