Check out the Rinai Tankless water heater.  No tanks, it just heats your water up as you use it.  Much more efficient and it qualifies for a tax credit.  They start at $600 and the top of the line is about $1200.  I don't know the details, but I've convinced my parents to include one in the house they are building.  On a micro scale, you will be more energy efficient.
Keep in mind that Rinnai and Rheem only make NG-fired units.  We're cancelling our gas service, and are looking at electric tankless units to use in conjunction with solar-heated water.
Ok, but for the basis of heating water isn't NG much more efficient than electric?  I just read somewhere that NG costs are relatively fixed.  So the last quad of NG would take the same energy to extract as the preceding quad.  Electric, mostly coal powered, would be less energy efficient due to the increasing cost to extract.  Or am I off?
You are probably correct, but we don't use the NG furnace anymore, so having NG service just for the water heater is too costly.  All the flat fees, taxes, surcharges, etc. add up.  

So we're switching from NG storage to Elec tankless.