YIKES! Water heater problem!

Okay...my electric water heater stopped working this morning. I know nothing about water heaters, but figured I'd at least take a look at it to see if there were any obvious problems. I opened up the top panel, noticed a red "reset" button, and thought "Ah! Maybe my water heater just needed to be "reset!""
Well, when I pushed the button, all hell broke loose; Sparks all over the place, smoke boiling out of the insulation like there was a party of cuban cigar afficionados lounging around inside, even a few flames shooting out. It was like a miniature 4th of July. I scrambled back to the breaker box, and shut it all off.
Now, obviously I'm less than happy, but I haven't a clue what just happened. Is my water heater ruined? What should I do?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
Add image file

HomeOwnersHub.com is a website for homeowners and building and maintenance pros. It is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.