Tank is rusted out, and requires replacement.
I) To protect yourself from ruptured tank, you should turn it off and use it only when hot water is needed.
http://waterheatertimer.org/Emergency-steps-for-leaking-water-heater.html
II) How to install ordinary tank-type water heater yourself:
http://waterheatertimer.org/How-to-install-gas-water-heater.html
III) There are 5 preventable things that kill a water heater and cause it to rust away.
1) Anode rod depletion.
Loosen anode rod before installing water heater.
http://waterheatertimer.org/Replace-anode-rod.html
2) Stray current corrosion
http://waterheatertimer.org/9-ways to save-with-water-heater.html#Ground-tank
3) Sediment build up because no water softener
http://waterheatertimer.org/Clean-sediment-out-of-water-heater.html
4) Corrosive effects of water softener, and anode rod not inspected (see #1 above)
5) Chemicals stored in same room as gas appliance.
Read page 2 of manual below
http://waterheatertimer.org/pdf/Service-manual-for-ignition-resistant.pdf
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