I just did research on this very issue. I too wanted to choose an environmentally friendly water heater and felt it would be worth the extra expense to do so. However, I read a great deal about on-demand heaters and ended up going with a (gas) tank instead. Here's why:

They end up wasting MORE water because it takes awhile for the water to come out of the faucet hot. I'm not interested in wasting water. I also found out that you can't run as hot of a shower and occasionally after a ride in the rain I have a chill I can't shake so I like a nice hot shower.