I'm having a hard time getting my head around the notion of replacing a working HW heater that may have another decade of life in it just because you have other plumbing to be done. Unless it's showing other signs of deterioration, purging the sludge off the bottom and replacing the sacraficial anode might be in order, but that's about it.
But since it's in an unheated uninsulated garage, buy some 3/4" closed cell foam pipe insulation and insulate everything all the hot & cold water plumbing you can get to. Any bare near-tank & HW distribution plumbing is probably half your standby loss in winter. If the local plumbing supply doesn't carry it, buy some online (Grainger sells the stuff as well.) R4-R6 is what you're looking for. The 3/8" wall stuff sold at box-stores is only R2, but even that is worthwhile if you can't/won't get anything better.
Whether spending more for a condensing heater makes any sense at all depends on how much hot water you use and what your fuel prices are. In 1-3 person households the numbers don't work nearly as well as with 5-8 person housholds. But gas is cheap right now, even if it might not still be cheap in 10 years. If the installed cost delta is on the order of $1000 or more, you may get better return spending that money on a drainwater heat recovery heat exchanger (another plumbing project) than going with condensing vs. standard efficiency HW heaters, if yours is primarily a showering (not tub-bathing) household- especially if they like long or high-flow showers.