Definitely get a tanklass water heater, and advertise on craigslist for someone to install it for you, unless you can do it yourself.
My previous 40g water heater lasted 28 years, because I have a 5 micron sediment filter at the water intake to the house.
Home Depot had new ones for $325 but sears had a slightly lower price, and a low price quoted for installation. Imagine my surprise when the bill came out to $850!!!!! The guy said yeah that happens all the time, the price is much higher than the quote.
I could have had a tankless put in for much less, and now I'm stuck with this albatross for another few decades. The only thing is it does use less gas than the previous model as it's better insulted, but I would much rather have a tankless model.
In fact I could have installed the tankless one myself, except for the vent pipe through the attic, but probably any handyman or roofer could have done that for a very reasonable price. My vote is to most definitely get a tankless water heater. The induction type would be best, though they are not yet as available as the cookers.