Waterstones: Grind quickly with the steels they are designed for. Some waterstones don't cut wear resistant steel very well. My Nubatama stones, which are otherwise a VERY high performance set of stones, cut D2 fairly slowly. Waterstones are highly variable. There are dozens and dozens of different types. Studying waterstones can become it's own hobby or discipline. Jason B knows a LOT about them and frequently makes recommendations based on people's needs: The steels they want to sharpen, their budget, and the types of knives they will use them with. The grinding feel of waterstones is very different than harder stone types. But that's waterstone dependent also because some waterstones are VERY hard, while most are somewhere between medium and soft-ish. I've had trouble getting consistent results with mine. I'm sure it's a matter of practice and technique. But I've been sharpening for quite a while. Waterstones are different.
Diamond plates will cut almost any steel type, including the most wear resistant. They won't ever need flattening. If you use light pressure they'll last essentially "forever". If you use harder pressure, you'll break off the diamonds and dramatically reduce the life of the plate. I've had very good luck with my DMT Diahsharp 8x3 plates. The feel of sharpening on them works for me because I can get good consistent results with them. There is no where NEAR the variation in diamond stone finishes that there are with waterstones. There are something like 7 different grades (or grits) of DMT stone and that's it. They produce a certain "look" to the finish due to how the diamonds cut (deeply) into the steel. The grit rating isn't exactly comparable to other stone types. For instance, the DMT EF, is supposed to be a 9 micron stone, which should be roughly 900 grit (ANSI). Should be a step up from a Spyderco medium. The finish it leaves is nothing like either of those. It's more coarse looking because of how the diamonds cut. The EF leaves a great finish for a lot of applications. It's just not comparable, by the numbers, to other stones.
Waterstones can help you achieve a certain "look" to the steel. This is important if you sharpen traditional Japanese blades with wide blade roads.
The diamonds and the waterstones are completely and totally different animals. I've tried to outline some of the differences to try to help you figure out which might be best for you. Please ask more questions if you have them. Good luck!
Brian.