House with blown in cellulouse (holes drilled in original wood siding, then filled and sanded), plus its attic, and the attic off our current rambler of similar age to yours. Happy with results in both cases. Note cellulose is dusty and may cause you problems if you don't wear a dust mask

For this winter, you can improve matters slightly by adding the thin foam sheets inside your outlets. They are already cut to fit: you just take off the outlet cover and add the foam. Of course turn off the circuit first.

One other note. Once you have the siding off use foam around your windows and doors to eliminate infiltration and check for other areas such as the sill plate.

You might check Aceee.org. Also I saw a post on DU2/3 about a broadcast on insulation this Tuesday (I think). Sorry you'll have to search: I didn't mark it. My hubby ( who works in energy efficiency) would tell you that the material is much less importanr than the care you take to really seal it

Hope this helps
SSS

I honestly don't know of its advantages/disadvantages except when I was researching build-it-yourself geodesic dome houses, they recommended cork as it would keep out the cold, and you could get 9 friends and lift your house if you ever wanted to move it a short distance on your property.

TlalocW

Your siding attaches to sheathing (usually plywood or OSB today, planks on older homes). If you want to replace that, your options are basically anything because the wall will be open. Alternatively if you're already doing a lot of improvements, you may want to go ahead and redo the interior walls, especially if you are good at drywall. If the old windows use counterweights, be sure to open 'em up and insulate the weight pocket.

If you're not going to open the wall, you are correct in your two options. Though I wouldn't recommend normal DIY'ers do blown-in cellulose in a wall that is not opened. It's very tricky to get it to pack properly on a closed wall. It's much harder than blowing it into your attic. In fact, if your house was built after about 1930-ish and seems uninsulated, it is likely that your walls are insulated with cellulose that wasn't packed properly.

Which one I'd personally pick would depend on the climate where I live. In areas like the Northeast, northern Michigan, the Dakotas, Montana, etc. I'd pop for foam. Warmer areas won't receive as much of a benefit from foam, since it doesn't get as cold. Alternatively, if my heat source was very expensive, foam might be worth it.

Foam on the outside would be the quickest and easiest, but unless you live in the Southwest it's not going to be much of an improvement. Also it's not really going to stop air infiltration itself - the joints between the panels won't stop air. The housewrap will though.

Long story short - get some bids so you really know what the difference in cost is, so you can calculate ROI.

First is where you live as the insulating values are dependent on ambient temperature differences.
The amount of glass/windows and their insulating values must be considered.
In most US climates windows and walls can share an equal value in heat loss, depending on many particulars of course.
An analysis of costs for both systems must be looked at.
I live in a high desert region of Colorado where winter heating is almost equal to summer cooling when insulation is considered.
Many older homes I have seen brought up to modern specifications have had all windows and doors replaced, a new exterior consisting of stucco over a layer of high density styrofoam, and a blow in type of insulation in existing wall cavities.
Research all three of these options and choose the one that fits your budget and gives you some satisfaction.
You may find local sources of information if you have an Energy Resource Office nearby.
Check out this later post: http://www.democraticunderground.com/115847

If you want to check it out. I am in the same boat with a tiny two dormer cape cod. We will be doing a roof and insulation this Spring, and maybe new windows come Fall.

We bought an older house, 30s built, that had blown in celulose insulation where they could and where they didn't flat ass miss. The ceiling was blown in also. The cavities in the walls that were filled at one time had settled about 18 inches so the top 18 inches of our walls were not insulated any longer. In the attic I could see that when they blew the cellulose in that they put a 6 inch layer but it too had settled between the ceiling joist to where it was maybe 3 inches of insulation. When we bought the house we bought it with intention of changing the floor plan as when it was built they had bedrooms that were 10 ft by 9 ft, a kitchen that was 8 foot by 9 foot with a 7 foot ceiling, the dining room was 8 foot by 8 foot and I could go on, oh the living room was 32 feet long, who needs a living room that is 32 feet on one dimension. So you can see that a total rebuild from the inside out to the inside of the outside walls and the underside of the decking and all other than load bearing interior walls were removed to allow me to completely change the floor plan and complete re-wire the house properly and to completely re do the plumbing. We moved our bathroom, added another bathroom, all this requires re-plumbing and re-wiring anyway. I put fiberglass insulation in the walls and ceiling and I use Johns Mansvile insulation, it is encapsulated in plastic on the three sides that are not the vapor barrier, even thought those sides and back were covered with plastic the plastic was full of small holes to allow water vapor to not collect in the insulation and wood studs and cause the wood to rot. In some places I found 7 layers of drywall and paneling with some layers of the drywall painted and some were wall papered. I ripped up all the flooring, carpet, and put hardwood, bamboo and tile down so they are 3 layers thick. Our walls are 8 ft 2 and 1/2 inch tall so I had room to do that with out lowering our ceiling which is still over 8 ft high. Our kitchen and dining room I turned those into cathedral ceilings and that really gave out home a new look. I planned our kitchen/dinning and living room in one big tee shape with the kitchen stove in the cabinets that are a break in between the living room and kitchen so my wife can watch the tv or visit with friends while fixing a meal.
Sorry bout the long winded but I'm pretty proud of what I've done to this old, now new house. This last summer I replaced all the windows with double pane low e vinyl and removed the vinyl siding and put house wrap over the entire house gluing the house wrap to the flanges to the windows using caulk so that no air will get in between the window and the house wrap and then replaced the siding. The person who originally put the vinyl siding on, Mennonite workers, low priced cheap labor, were pretty lazy or chintzy, not sure which, but there were places where the siding wasn't even nailed for 6 to 8 feet, its now nailed every stud. The new windows and house wrap made a big difference in the comfort level in here. We heat with wood pellets and I can already tell we're going to save more that the house wrap cost and probably the price of one of the windows this year alone in heating cost.

I guess other than the bragging I'm wanting to say if at all possible stay away from blown in insulation, especially cellulose as it settles and it settles a lot. I plan to add another 6 inches of fiberglass batts to the ceilings as soon as I get to it. We're getting old and I don't want my wife to have to worry with her home in her retirement after I've gone to be with the ghost of the world. Hence the extra steps I've taken to ensure that she/we have a good, up to date, old house. I used PEX for my plumbing, with the waste water in all PVC all anchored at the most 3 foot intervals, no block or rocks that the plumbing is setting on either,, used plumbers tape, which is a 3/4 inch steel strap with nail hole on about an inch and a half centers anchored to the floor joist. I used 1 inch PVC pipe from the meter to the hot water tank and to the kitchen sink. When some one is in a shower and someone else turns cold water on in another place you will never know it in the shower.

I took an old well built house and turned it into a doll house for my wife, I know no other way to put it.

I've got one small room we're going to turn into a sun room to do yet as that is where I keep my tools, table saws etc so I can do this work on the house without making trips to and from the shop. As I say to my wife when I finish this room I'm moving these tools to the storage shed to never have to bring them back in. I know that I'm going to be changing some of the oak flooring that I put in the kitchen and dining room with Cork and bamboo, respectively, both we like real well.

I plan to insulate under the floor too as soon as I get to that.

Drywall is relatively cheap and is easy to finish if you just give it a try so my first suggestion is to remove the drywall on the walls so you can insulate with fiberglass insulation as in all my years I've never witnessed, other that in trailer homes where they don't anchor the insulation and never put in a full cavity so I can guarantee the insulation will settle in them. Other than that never seen fiberglass insulation sag.

...or so he claimed. YMMV!

The plaster walls were stripped last month for "the kitchen project". The cellulose looked dense and had not settled. However, that was after only six years, so it is possible that the cellulose may settle more.

Fiberglass has air pockets in it. If you have a pressure differential due to the vacuum drawn by a forced hot air furnace or wind, your heated air may be pulled out of the wall cavity and replaced by cold air through "infiltration".

I installed Johns-Manville fiberglass insulation into those wall cavities last month and I noted with delight that the insulation is denser than fiberglass from years ago. The density, and the neat plastic wrap around it makes it better. It was less itchy, too.

My fix for infiltration is that I caulk every opening, even the wire holes between adjacent wall cavities.

Owens Corning was sued by Minnesota government because their loose fill fiberglass was so airy that it did not give the R value that they claimed.

Glad your house is working out nicely! sounds dreamy

Only time will tell on the packing part. Its very well possible that they contractor that did ours years ago didn't know to use pressure to pack it down.

I seal the house on the inside surface when I paint the walls so there isn't any air that comes in other than through the windows, old ones, not new ones, (I hope) and in the door as we go in and out. My stepson worked for a painter for a while and he taught me the finer points of using masking tape and latex caulk for a professional look and result. Now that I've got the house wrap on the outside I can tell less air is getting in to the cavities where the insulation is because the walls feel warmer now.

and my creative talents are musical. LOL