Since there's been some discussion about these critters here lately, I thought I'd add my take on them. I have three customers who actually have them, so I speak from some experience.
First of all, the answer to questions like "should I install one?", "are they more efficient/cheaper/better than a tank heater?" is definitely "it depends". It depends on (in no particular order):
o where the heater is installed (how far it is from the farthest faucet) o how big the heater is o the water usage pattern
The last probably being the most important.
Two of my customers have the same type of older-generation tankless heaters (Aquastar, a French-made unit, now handled by Bosch for spares). Two of them are installed in the attic crawlspaces of a commercial/residential building, probably because the remodeling contractor didn't want to sacrifice any more space in the living units than necessary (and also simplified venting, since they're right under the roof). This makes these two a pain in the ass to service; I've overhauled both of them (replacing water valves and thermostats). Still, they operate pretty well.
One of these had an odd setup, which it took me a while to figure out. Someone had written "OPEN 3/4 TURN" on the inlet valve, and it turned out that sure enough, the heater would simply not function correctly if it was opened any further. Not enough hot water in the shower, though the kitchen sink was OK. The culprit was the shower valve, which was a strange one that was full-on with temperature control; there was simply no way to have anything less than full flow in the shower. This shows that there's a definite limitation to how much flow these heaters will handle.
Another customer has this same heater in their fairly large house. They're very happy with it; they have plenty of hot water and their gas bills are lower.
My other customer just installed a Tagaki heater outside her house. This unit is remarkably small, requires no venting, and supposedly has a much higher capacity (and is more efficient). (Having electronic ignition doesn't hurt, either.) I'm told that this is pretty much the state of the art today. Too early to tell how it'll affect her gas bill.
One thing that ought to be considered is insulating hot water pipes to further avoid heat loss.