That depends mainly on heating duration and use. Air heaters are recommended for retrofitting, due to the lower installation cost. When using water heaters, convectors or radiators are required to emit the heat, which cannot be retrofitted well for aesthetic reasons.
Water heaters are mainly considered for new builds in shipyards when designing yachts or when the interior has to be renovated. They are integrated into a water circuit and are used to heat the salon and cabins in conjunction with convectors, radiators or fan-driven heat exchangers. Potable water can be heated up, and the engine pre-heated as required.