Live in New England.

If I re-do my house with vinyl siding, which would go directly over the
present T1-11 wood siding which is in poor shape, does it make sense
to have installed styrofoam (or other) insulation between the T1-11 and
the vinyl ?

a. Would the added insulation R value (no idea what it would be) justify
the added installation cost ?

b. Does it make for a "better" or smoother job ?

c. Anything to be particularly aware of in work like this ?

Most vinyl installers use a styrofoam fan-fold underlayment as a standard
practice over sheathing. It might be usable over T1-11, since it is
sheathing.

The R-values is not great, but you can specify thick stuff that conforms to
the contour of the siding for more R-value.

Here is an idea of what I am talking about:

http://news.thomasnet.com/fullstory/30711