We had a Newport Diesel heater in our old 32-2. It was more than adequate for chilly NW nights. At its lowest setting we were popping open hatches to get rid of some of the heat, and it used very little fuel. I think it would be a good match for liveaboards on the 32's big sister. If you can find a small tea kettle you can actually use the heater to boil water, which was pretty neat.
We generally had no issues with diesel smell in the cabin - other than when I scewed up some fittings.
All that being said, we will probably eventually install a Dickinson propane heater on our 35-3. For our usage, the fuel economy won't matter as much, and now with small children, we no longer go to the boat in the dead of winter and now just want something to take the chill off. Plus installation looks WAY easier.