I went with the demand water heater on our conversion.
Precision Temp makes the RV-500 which is a nice unit. It's smaller than the tank type, and only uses propane when you're running hot water. It's more expensive but has its advantages. Electronic ignition - no standing pilot.
Check out our installation at http://www.mobilehomestead.com/buses/david1.htm
There are some installation photos. It was really straightforward.
The advantage is you can take nice long showers after a day's work or recreation.