The biggest downside of having a tankless water heater is that it never runs out of hot water, and my daughter's showers can run forever and often do. Trevor Murphy in Queensland had the same problem, and invented the Aqualim shower head to deal with it: the thing shuts off after a set amount of water flows through it. My daughter would be hitting me over the head with a shampoo bottle, not smiling.
It won big on the Australian TV show The New Inventors, but is not yet in production. It is clever in that you are not forced to get out of the shower with a head full of shampoo, but can easily be restarted. However you will be aware of how much water you have used, and no doubt the "Prius Effect" will kick in: the knowledge of how much you are using affects the way you use it.
More at Aqualim, via Inhabitat
More ideas for the shower:
TreeHuggerTV – Green Your Shower
Getting Ready for Earth Day: Save Water When You Shower
Save Water; Shower Japanese Style
Navy Showers: Water Saving Goes Hardcore