Water discoloration is a clear sign your unit is underperforming. Rust-colored water, or water with a metallic odor, can mean a few things. Either the sacrificial anode rod needs to be replaced or the tank itself is beginning to rust, often due to corrosion at the steel lining. A corroded tank must be replaced as soon as possible.
Cloudy water often indicates a sediment buildup inside the tank, and if the water remains cold, a heating element may be broken.