Water heaters can be a lot like shoes. (Stay with me here guys) If you spend the time to pick the right size and style you will be happy for many, many moons. Rush into it, and you will regret it for the next 6-12 years that it is warrantied for. Lucky for you, I am in the mood to help guide your decision.
First up is electric versus gas. Gas (LP or natural) units are much cheaper to run, but if you convert from electric over to gas the installation will be complicated by the need to run gas lines AND install duct work to vent the new unit. Electrics are heavy on the wallet for operating costs, but the installation requires no venting, and it is easier to throw a breaker and connect a few wires than to shut off the gas, hook up the new flex line, and then check for leaks. Most people stay with what they have to save on labor costs, and for the most part I would endorse this line of thought. If you are starting from scratch though, go gas.
Second thing to consider is size. Where is the unit currently installed? Have your hot water needs increased by the addition of jetted tubs, children, or others to your home? Have your needs decreased? Just replacing with the same size could lead to dissatisfaction with how much hot water you have on demand or you could end up spending hundreds more on a unit that you really don't need. The addition of a jetted tub or a child will usually indicate the need to go one size larger than your current unit. A 30 gallon water heater WILL NOT fill up your jetted tub with hot water. Conversely, two people in a house without a jetted tub don't need a 50 gallon unit unless they have frequent overnight visitors or a severe mental disorder that requires lots of hot showers all day. If you decide you need to go bigger make sure you can still install a larger unit in the existing home. Measure, dang it, measure! Also consider that as you go up in the amount of years that a tanked unit is warrantied for, you will undoubtedly be increasing the hot water output as well. A top line 40 gallon unit will usually put out about the same amount of hot water as a basic 50 gallon unit.
The last thing to consider is whether or not you want to upgrade to a tank less unit. These units have been around in Asia and Europe for years, and they are starting to come into their own in the U.S. As most of the energy a tanked hot water heater uses is to keep 30-75 gallons of water piping hot 24/7, there is a lot of energy being wasted when no one is showering at 3am or 1pm. Tank less units eliminate this waste by only firing up when there is an actual demand for the hot water. They also save huge amounts of space. Imagine your hot water heater only taking up the space of a piece of carry on luggage nailed to your wall. These energy and space savers do take a larger bite of your wallet to buy though.
Electric units are pretty limited in their capacity in gallons per minute @ xx degrees temperature rise, but they have the advantage of being able to be installed in series so that with multiple units you can meet any need. Need more hot water? Install another unit. Again these units are more expensive than gas, but they will take a huge bite out of your electric bill compared to a tanked unit.
Gas units can produce much more hot water than the electrics so there is no need to install multiple units in a single family dwelling. The big concern with these units however is the duct work. Your existing duct work WILL NOT suffice. It will have to be upgraded to stainless steel at the very least due to the high BTU (heat) output. These units can put out in excess of 199k BTU. In some cases you may have to actually put an assist fan in the duct work to help move the combustion by products properly.
Most homes can use a unit (gas or electric) that puts out about 2.5 gallons per minute at whatever temperature they need because that is what most faucets and shower heads are limited to. If you want to run more than 1 water-using appliance (like taking a shower while running the dishwasher) you should upgrade to a unit(s) that will roughly double that mark.
Now that you are in possession of the facts, go out there and scare the crap out of the salesman when he tries to sell you what you don't need or want.