Frank,
Personally, I would check out the vaparetto. If one is super crowded, just wait (be at the head of the line) for the next one, PROVIDED you travel with just carry on. If you have more luggage than that, then I'd suggest the water taxi.
And, if it looks like an unbelievable zoo of crowds at the vaparetto dock at the train station, you can then just jump over to catch a water taxi instead. One of those decisions I'd make on the spot.
Husband and I took our two RS rollaboards and two totebags on the vaparetto from San Marco to San Basillo (sp?) to catch our small ship last October, and we had no issues with space, etc. We simply waited for the next vaparetto so we could be at the front of the line for boarding (to get our suitcases situated...and certain seats (the front) provide a spot away from the on/off path for other passengers. And, as Sam noted, lots of stairs in certain locations, but since you've been to Venice before, you likely recall that.
The money you will save will fund a decent dinner :)
(NOTE to others that may be reading:. If arriving from the airport, we highly recommend the shared water taxi....a lovely way to see Venice for the first time. From the train station, though, where Frank is arriving, I have no idea how easy it would be to catch a shared water taxi. If a shared water taxi is easy to catch there, I'd likely choose that just for the charm of it all and the more reasonable cost (vs. a private water taxi).
Have fun in Venice!