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I have used Games Workshop paints since I started Warhammer 40k, but I am starting to wonder if I should get Vallejo paints as well. Are Vallejo decent or just cheap tatty paints? I have never used Vallejo so I am not sure what they are like. Is Citadel better? Is it true that vallejo paints are NOT waterproof?

Vallejo are excellent paints used by plenty of top painters. Some of their colours/rangers are better than other ranges (such as citadel), whilst some are on a par or slightly worse.

Generally they are as good if not better than GW's paint.

And Vallejo are as waterproof as any other acrylic paint. I've never heard anywhere ever that they are not waterproof - do you have a link?

It was a rumour I heard on a youtube video, but I've forgotten which it is.

Vallejo dropper bottles > GW pots.
Vallejo prices > GW prices.
Vallejo paint ~= GW paint (some better, some worse, most basically the same)

If you're serious about painting you will probably end up using paints from several ranges. I moved to Vallejo from GW and am very happy with their game color and air ranges, with a couple from their other ranges. There are some good threads on this topic including one with a comparison chart.

There are a few things I really like about Vallejo, the dropper bottle is great, it makes it so much easier to use, especially if you mix colors.
I do not like citadel's idea of making base, layer, etc paints. I like to thin my paints myself and I would rather have a consistent base than different thicknesses for different paints.
One major advantage of citadel is that most people use them so if you are going to copy a color scheme 9 out of 10 times you will get the names of citadel paints. Yes you can convert citadel to vallejo colors but they are sometimes off slightly.

I personally buy citadel paints because I play at a GW and I support my shop. Vallejo has a slightly better product but I would rather give money to the place I play at and keep it open then to buy somewhere else.