Allow me to be a voice in the wilderness on the tankless water heater. We had one put in last January to replace our old gas heated water tank system. (We are in a city, so kept the gas line.) Of relevance to your decision, though, a big factor in our deciding on this was our guys' assessment that because we are very light users (only two people, only use hot water for showers and washing dishes), tankless made sense. If we were more people or otherwise had greater demand for hot water, keeping the tank would have been a reasonable option.
As an aside, the tankless system has worked well, other than its making random, odd dinosaur-belching sounds. But to tell the truth, those sounds have enhanced our day to day enjoyment of life. Such is our life!