For a third option, you can look to hydraulic machines, which use pistons to generate resistance. Hydraulic rowers are quiet, and they also tend to be smaller and cheaper than other kinds of rowing machines, but you won’t get the same smooth rowing feel, or the consistency of resistance, that you would get with an air or water rower. What's more, reviewer after reviewer has found them unreliable and high-maintenance.
One of the major deciding factors between water and air rowers is price. Water rowing machines are often found in higher price ranges with the lowest model going for $700 and the best models starting around $1,100. Air rowers are found in every price range starting at $300 and going as high as $1,000+. The affordability of air rowing machines makes them very popular.
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I kayak (ocean and flat water, not river), so I was drawn to the WaterRower over a flywheel type rower (which I have used in gyms) because I wanted to hear the sound of the water, which I miss hearing against the hull of the boat during the winter when I can't get out on the lake. I also like the way the paddles engage in the water; it's a very smooth pull and release, and moving the mass of the water instead of a dialed down tension feels more natural. As someone else also commented, the seat (at least on the wood version) is incredibly smooth and solid; no wobbling at all. I generally listen to music on my Nordic Track ski machine, but with the WaterRower I am content to listen to the sound of the water; working out on this is somehow both energizing and calmingly meditative at the same time. In the event that you want to use it while watching tv (this is one use to which I wanted to put it), it is quiet enough to hear the tv without having to turn it up.
The rowing machine itself is unlike any other on the market with its patented water filled flywheel. It is hard to exactly copy the action of a scull on the water, but the mechanics of the flywheel spinning in water comes in a close second on dry land. The fact that the water is 800 times denser than air means that there is no need for any extra resistance or dampening that you will find in normal air rowers. The faster you pull, the more resistance is generated giving it infinite variability. However, if you want to be able to practice rowing with a faster stroke, you will have to reduce the amount of water in the tank unlike an air rower where you just have to adjust the baffle.