250.50 describes the grounding electrode system and goes on to say that if you are using a metallic water pipe it must be supplemented with an additional electrode.(250.53(D). You are not limited to a rod and it's certianly not required to be copper. 250.56 explains the need for a single rod to be <25 ohms. If it's not less than 25 ohms it's to be augmented by an additional electrode of the ones discribed in 250.52(A)(2) through (A)(7). The '05 code will have us using the rebar of the foundation to supplement the water pipe and we won't need to install ground rods.
Most contractors will install a bonding jumper at the water heater to accomplish two things. (1) It ties the hot water and cold water piping systems together and is needed per 250.104 and (2) it bonds across any dielectric unions typically found at the water heater.
Side note: Most hot and cold water piping systems are tied together at a faucet someplace in the home or a mixing valve but this jumper wire at the water heater avoids an inspector checking this out at the faucets. (George likes it)
