I've been looking at the Tormek grinder for several years, but only because I do a lot of woodcarving which requires constant sharpening of many odd shaped tools. I have never seen this grinder mentioned outside of woodworking (cabinetry, carving, turning) groups and magazines. I'm sure it would work great for a professional knife sharpener, but for most of us, it is just more than we need.
The Tormek is a Low speed water-cooled grinder (90 RPM) which is unlikey to heat up steel enough to change the temper. There are jigs available for many different types of woodworking tools (knives, chisels, planes, qouges, and woodturning tools. You can 're-grade' the stone from rough to fine. It has a built in leather stropping wheel.
I think it is a great tool, and is far better for the requirements of sharpening than many other grinders. It is expensive, however. And for just knife sharpening, I think it is a bit too expensive for my needs, although I think it is a good price for what it is.
As for waterstones, they work really well, but require a lot of maintenance. I have several, but most often just use three grades of ceramic stones dry (medium, fine, and ultrafine), followed by stropping on leather charged with chromium oxide (green polish). It is really very rare that I need the aid of courser stones. I have never used a grinder on a knife for sharpening.
If you have a lot of money to spend, and a lot of tools that need sharpening regularly, I think the Tormek would be a fantastic thing to have. I plan to own one someday. But for the needs of the average knife knut, it is more tool than they need.
Paracelsus
You will need the 'knife' jig for $38 more in additional to the straight edge fixture (chisels) it comes with. BTW, $398 is the Best price I have ever seen for this tool.
