Actual scientific information on the effects of food and drink is notoriously hard to sift from all the dieting pseudoscience. I know that caffeine is a diuretic, which means it will cause me to lose more water, but given that I'm dosing up on it with water, will I lose more water than I gain? Even if it doesn't for longer drinks, will drinking espresso result in a net loss of water?
Though caffeine's action as a diuretic is hotly debated, recently it seems the scientific consensus is that caffeine in normal doses is a weak diuretic in caffeine-naive individuals only (those without a tolerance), and only in doses exceeding 250-300 mg, or 2-3 cups of coffee. To go even further,
A profound tolerance to the diuretic and other effects of caffeine develops, however, and the actions are much diminished in individuals who regularly consume tea or coffee.
And from the same review of the literature:
Doses of caffeine equivalent to the amount normally found in standard servings of tea, coffee and carbonated soft drinks appear to have no diuretic action.
The New York Times exposed this myth in this article:
Researchers found no significant differences in levels of excreted electrolytes or urine volume [between those given caffeine and a placebo].
Here is another good resource for answering these questions in a clear, FAQ-style and features a good list of references on the topic.
As I understand it caffeine itself is a mild diuretic. Some say this effect quickly goes away (within a week). Even if it does not for coffee the mildness of the diuretic is mostly compensated by the water intake.
I suppose in the case of espresso there may be a net loss of water, but it would still be very minimal.
I am not a doctor, so I have not fully researched this. I have not provided links because there is such varied opinion on the topic. Someone from the medical community might be able to provide a definitive reference.
Even though caffeine may be a mild diuretic, most coffee is over 99% water, contributing to hydration.
I read about an interesting study that measured no difference in effective hydration between several classes of beverages (carbonated, caffeinated, sweetened, or not).
They're all mostly water.