Replaced the ancient 9HP with a 14HP Yanmar 2YM15 the moment I bought my Halcyon 27 Clipper. For the waters we go it was the right choice between, I think, a 12HP replacement and the more powerful 3YM20.
It is said newer engines weigh less for more power. Might be but a more powerful engine still weighs more as an old underpowered one. Moreover, more power means the cylinders are bigger hence one gets a bigger engine onboard and less space onboard to manoeuvre around the beast for maintenance. Less space, more heat production in the confined space...
While originally the engine could be reached via a hatch in the cockpit the engineer who put the new motor in closed the (leaking) engine hatch and provided "access" via the removable staircase in the boat or (sort of) via the lockers in the cockpit.
Fuel efficiency might have been enhanced in newer engines they still need their juice and unless you find space onboard to add a tank or put in a bigger one the fuel supply will come from the tank designed for the original engine.
We did not increase our fuel tank capacity but monitor the time the engine runs closely and have had to refill the tank while at sea (at night).
The 2YM15 does come with an hour-counter but lacks (besides a fuel gauge) a decent engine temperature probe (just a red light and a warning sound when actually overheated). We intend to patch that up with a BBQ dual-probe device attached to the engine with heatsink gel and monitored via Bluetooth. Should do the job. We also sometimes remove while sailing under engine for longer stretches the staircase so the engine heat can disperse.
The 2YM15 has served well. Only in extremely strong currents like when getting into Cardiff marina against the powerful tidal current in the Bristol Channel we needed to lower the outboard engine to give an additional 4HP to get us moving.
Replacing an old and certainly an underpowered engine is a good idea. Adds to the safety onboard. The 2YM15 provides 80Amp electricity. Great when one has upgraded the electronics onboard as well. Replacing the engine of an existing boat comes with additional issues; like fuel tank size, weight. ... I do think the investment was well worth it.
This is an interesting article related to the matter: http://www.ybw.com/forums/showthread.php?376626-Yanmar-why-does-anyone-buy-the-2YM15-instead-of-the-3YM20