I havent ever been able to figure out how to get a payback out of a tankless. In new construction arrangements its almost a break-even but in retrofits you're looking at $1500-2000 installed for a tankless big enough to handle two service demands. And despite their reputation for being more reliable than tank heaters, I've seen plenty of them break down.
The life of a HWH? Depends on your water quality and your luck. Older WH's had big honking thick tanks and took a long time to rust out. Newer ones are of course cost reduced, thinner, and every once in a while you get a bad one and well, the QA costs have been reduced too. Water heaters depend on a rod of 'sacrificial metal, which may be aluminum or magnesium. The elements in your water that might attack the metal tank of the WH elect to attack the softer metals in that anode rod and eat at it. Eventually it gets completely consumed. At that point you have to replace it or the corrosive elements in your water will begin eating the tank. Generally WH's come in 6, 9 and 12 year 'warranty' versions. These are often the same, with the difference being a 6 year has one rod, a 9 year has one rod and a half rod thats also the hot water outlet pipe, and the 12 year has two rods, one in the hot water outlet.
If you have good water, a 6 year WH might last 18-20. If you have bad water, it might last 4. You'll know when it goes, it'll start leaking. Signs of rust or water on top of the unit near the pipe connections or rust/water near the burners are signs that its time to replace the WH. Another sign is a lot of steam coming out of the vent stack, which means you've got a water leak in the gas duct that runs up the middle of the WH, and the gas flame is converting that to steam. There usually isnt a lot of visible condensate in a gas water heaters vented gasses.
You can replace the anode rods with new ones, but unless you removed them when the WH was new and put some teflon paste on the threads, the things are likely to be rusted in place. A 3' long wrench might get them out but you might also just sheer off the head or rip the whole mess out of the water heater, ruining it.
I heard a lot of stuff about the aluminum rods traditionally used in WH's being one of the possible sources for Alzheimers. So I make sure I use WH's with magnesium rods...just to be sure. I've also heard rumors that old water heaters can be loaded with temperature resistant bacteria and other growths that may cause a bad taste or health issues. Some recommend turning the WH temps up to full tilt for 4-6 hours once a year or so.
Generally the higher the WH temps, the shorter the WH life, but not by a lot.
When replacing a WH, its a good idea to consider installing a thermal expansion tank. These are little bladder filled tanks, look like a small gas grill propane tank, and they're filled with air to a pressure matching your houses internal water pressure. Should an overpressure situation occur from heating the water, the tank will absorb that. Some homes water main valves allow overpressure backflow into the water system...many newer homes or ones that have had their water main valve/meter are non backflow systems and are 'closed'. I've seen closed systems with a big water heater and no expansion tank hit 90-120PSI. Most household plumbing can only take up to 80. Some plumbers overcome potential overpressure situations by installing a cheap inlet valve in a toilet somewhere in the house, and when the pressure goes over 80, that toilet will cycle and let off the overpressure. Which works great until the homeowner replaces that valve with a good one.
So if you hear your toilets cycling, your plastic refrigerator icemaker water line keeps breaking, or you have excessive plumbing leaks...thats probably the problem.
Cleaning WH's is another area of dissension. Most WH's are actually fairly hard to clean sediment out of. Opening the water valve with a bucket under it or a hose will only get some of the sediment. A pretty small amount. Turning the water off, draining it entirely, then turning the water on can create some turbulence and remove some more...but its a lot of stress on the tank and the stock el cheapo drain valves they put on most WH's these days will absolutely start leaking on you if you fool around with it too much. Some WH's have 'rotoswirl' or self cleaning inlet tubes. They sort of work a little bit. Some companies make replacement cold water inlet tubes you can install in a new WH that are allegedly better than the stock self cleaning tubes. Most plumbers dont feel these work very well either but they're better than nothing. One plumber I know suggests just leaving the damn thing alone as he feels the draining process may cause more problems than it solves.
Its almost a certainty that a 12-15 year old WH, even one thats been drained regularly, will have a foot or two of rock hard sediment in the bottom, which will inhibit efficient heating and reduce the capacity of the heater.
Given that WH replacement labor is often as much or more than the WH itself, it makes sense to find and install a quality product that will last. Spending $400 every six years to replace a $300 water heater makes little sense when you can spend $400 every twelve years to install a $400 water heater.
You can save a little money by buying a six year heater and buying a second anode rod to install in the hot water outlet yourself just prior to installing the WH. In effect you'll be making a 12 year WH with a 6 year warranty for about $80 less.
As far as adding a blanket causing problems with an electric WH? Well, many of them tell you not to put a blanket on them, I've seen a lot of unusual failures in both gas and electric heaters after a WH blanket is put on them, and I'd imagine the manufacturers who stamp "do not put a WH blanket on this heater!" presume that you wont and may have components inside or on the heater that arent rated for an increased temperature or are reliant on exposure to the air. Rather than spend $30 to save 50c a month in electricity, I'd rather replace the electric WH with a high end unit like a Marathon or do a gas conversion, install a 12 year .64 gas WH and save myself a whole bunch of money over the next 15 years.
And THATS just about everything I know about water heaters, other than the fact that they're ridiculously heavy...