MSNBC has this article about how Hookah pipes are becoming the preferred substitute for cigarettes among young people.
I have to wonder if their research is quite as complete as they want you to think it is, since they seem to have a somewhat naive idea that the only thing burning in that hookah bowl is fruit flavored tobacco. Now I don't want to put myself forward as any sort of expert on these things, but I'm a bit inclined to think that the popularity of the hookah has more to do with some of the possible alternatives to peach tobacco that might be getting incinerated. Think of various international smokes that might be successfully smoked in your hookah - say, Thai, Columbian, Mexican, Matanuskan and possibly just a bit of local inflammables.
I suspect that any use of commercially available tobacco products is more of a side-effect of the never-ending quest of the North-American Slacker to find a way to avoid the major harsh-out that comes from that last nasty puff on the blunt.