My answer may be a few years out of date, as I haven't used ArcFM since 2007.
This was before the days of editing templates in ArcMap, so at the time it was far more efficient to create a new pipe or valve in ArcFM than it was in ArcMap. The new ArcMap editing templates may simplify this process somewhat.
A major advantage of ArcFM is that the data model has been extended significantly to include intelligent behaviours, so the software knows it's placing a "valve" rather than a "point". In other words, ArcFM Water is designed specifically for water utilities, whereas ArcMap is a tool for everyone which has been customised slightly using the water database template.
The properties of a valve might be that it must be connected to exactly 2 "pipes" and that the diameters of the pipes must match those of the valve. Furthermore, placing the valve should split the pipe, but preserve certain attributes (eg work order ID) while auto-updating other attributes (such as the user who performed the edit, the time the edit was made, etc).
These behaviours are built-in to the geodatabase, so they always work. You could customise ArcMap to do similar things (and use relationship rules in the geodatabase) to mimic this yourself without ArcFM.
ArcFM also has more intelligent tracing functions, with better upstream and downstream traces than the core geodatabase. It has other functions specific to utilities, which you would otherwise have to write yourself.
IMO, the ArcFM editing tools (even 4 years ago) were better than the current ArcMap editing templates, as they are more intuitive, require fewer steps, and have more intelligent behaviours running in the background.
I think it's an either/or proposition - if you purchase ArcFM, it should give you everything you need (bearing in mind that it's built on top of ArcMap, so contains all of the core ArcMap functionality).
You may be able to request a trial copy of ArcFM Water and test it yourself.
(PS disclaimer - I used to work for ESRI (UK) using and selling ArcFM, but I no longer have any association and haven't used ArcFM since 2007)