Answer: They do save space, and may save energy, but.. They can save energy if you have long periods of time when you typically don't use hot water. You will save very little if there are people home all day and use hot water all day. The difference is also less with a high efficiency well insulated heater. This is also assuming the same efficiency and type (gas v gas or electric v electric) The down side is the delivery temperature can be a lot less constant than tank type heaters. The lower the volume the hotter the water delivered and the larger the volume the cooler the water. This problem is less of a problem with the newer better models, but it is still there. There is a reason most homes use the standard tank type. If I were building a weekend home I think I would use one.