Brian, my hot water heater went out on me at my former address. When I replaced it, I was told to get one that circulates water well on the bottom of the tank. That way, it will not rust on you as fast. This new technology does cost a bit more though. However, it seems like the warranty is good for like 10-years. Sorry this has happened to you, but at least it did so now and not in the middle of the winter. Good luck on getting this fixed.
Cheers,
Phil