I assume you mean propane fired instant water heaters. Up here in Canada they are illegal in boats even though thousands were installed in C&C's, Whitby's and Hinterhoellers. They are also very common on Gemini catamarans. (side note: the propane refrigerators in Gemini's are also illegal in Canada).
Our "Transport Canada Small Vessel Construction Standards" state that any appliances installed in a boat must be installed according to the manufacturers instructions. Of the five brands I am familiar with they all state in their manuals that these are not approved for boats.
I have been told (don't know for sure) that the issue is the valves are designed to operate in a vertical position and can fail at an angle of heel thereby releasing propane into the cabin.
Port Credit Marine Surveys