This is sounding like another one of those "You are both right" things depending on the location. Water quality varies considerably throughout the country and the world. I can easily see some areas where sludge is a serious problem (my 10 year old water heater was lousy with it when I replaced it) and other places where it's not.
One thing that might make me stay with a tank heater is that it provides 30 gallons of water in case there's an emergency and in the DC area, which I assume to be number one on the Islamic terrorist target list, that's no small consideration.
-- Bobby G.