I think that it would be much cheaper and more airtight/energy efficient if you were to install 4X8 sheets of foamboard and then put conventional vinyl siding over it.
There would still be plenty of little cracks between the pieces of insulated vinyl siding that a draft could get through. That draft would negate any r value of the siding. Imagine a super insulated home, but all the windows are open a half inch...
Well I suppose my question was really more about aesthetics. I've seen hundreds of homes with regular vinyl siding and have not been impressed with it's appearance. It's either saggy in spots or there are other clues to it's synthetic nature.
One thing I could not find about the insultated stuff is how the end joints are made.
The darker siding colors sometimes fade, but if its put up correctly (nails appropriately spaced, not nailed tight), it won't sag or bow. I covered my whole house/garage with it 8 years ago and have had no real problems.
The only issue was that I left something heavy leaning up against the outside of the garage wall for a month during the summer. It compressed the siding a little bit and when I moved it, the compressed area never sprung back out. I'm probably the only one that notices it though.
Its so easy to install, even someone with very little construction experience can put it on. Just get the starter strip on the bottom nice and straight, put up the correct trim pieces around the corners windows etc., and never ever pound any of the nails tight (it needs to be able to expand and contract with temp changes).
Erik's right. A decent installation of vinyl will show no defects like sagging. Even a half-arsed install will look great for 20 years...it takes 1/4 arse or less before it starts to suck.
Those insulated sidings are probably very expensive. It would be cheaper to use multiple layers of the foil-faced 3/8" styrofoam insulation that is normally put behind plain old vinyl. Unlike the thicker, larger sheets described above, you can stagger the layers to avoid cracks more easily than caulking so many joints. Either way, you could put an additional layer of vapor barrier (Tyvek / etc) on the outside of the insulation. Your contractor and neighbors will think you're 100% crazy.
For vinyl that looks nicer, look at the premium varieties that are shaped like shingles instead of clapboard. They come in thicker, stiffer, taller, less-long pieces that interlock on all four edges.
In the past, when doing a vinyl siding job, it was common to wrap the trim boards with sheet aluminum. Now it's starting to become common to replace trim with plastic lumber. I like that stuff, and it's probably right for you -- you would not like how easily dented the aluminum is.