This is an interesting question. I recall reading, quite a few years ago, an article in a British modeling magazine in which a widely respected (and highly skilled) ship modeler solemnly pronounced that full-hull models of twentieth-century warships looked ridiculous. (He said sailing ship models were different, and made a partial exception for modern warship models on extremely large scales.) Such categorical pronouncements always bug me. In my opinion there is - in this realm as in so many others - plenty of room for personal taste and opinion.
It's perhaps worth remembering that a scale model does - or has the potential to do - at least two things (and probably more). One - It provides a three-dimensional record of the actual, physical characteristics of the prototype (as a set of plans does in two dimensions). Two - it replicates, in miniature, the "experience" of looking at the prototype (as an oil or watercolor painting, or a photograph, does in two dimensions). In most forms of modeling that distinction doesn't make much difference. An airplane, tank, or car looks more-or-less exactly like a measured, colored drawing of it. If you're building a model of a P-51, about the only difference between the aforementioned options One and Two is whether the tires bulge under the "weight" of the aircraft or not.
A ship is different, because a big part of it is invisible to the eye most of the time. Previous posts in this thread have expressed well the differences between the visual impressions that a full-hull and a waterline model make. A waterline model (unless, like Subfixer, you're accustomed to looking at ships in dry docks) probably does a better job of conveying the visual impression somebody would get from looking at the real ship. A full-hull model, by definition, does a better job of conveying factual information about the ship.
The British modeler I mentioned earlier chose as one of his talking points the old Revell "Wind"-class icebreaker. He said it looked ridiculous (or some such word), because the underwater hull was of such a clumsy shape. I'd argue that the shape of an icebreaker's underwater hull is of considerable interest; it is, so to speak, what makes the ship an icebreaker. That particular class, initially, had an unusual piece of equipment: a big propeller on the bow, intended to break up ice. The idea didn't work well, and the bow screws got removed from the ships. The first issue of the Revell kit had the bow screw. One could, it seems to me, easily argue that slicing a model like that off at the waterline would delete one of its most interesting features. On the other hand, a waterline model of a Wind-class icebreaker does give a better visual impression of what the ship "actually looked like."
It seems to me that there's plenty of room for both approaches. My own meager collection contains both types, and I hope I'll never be forced to give up one or the other. In my opinion the ideal kit is one that offers the modeler both options, so he/she can make the decision on a case-by-case basis.