I have no insulation in my walls, but lots in my attic. Had the attic
insulation put in the first winter I lived there. Made a huge
difference. After that you need double pane windows and
weatherstripping on your doors. Also, insulate any hot water pipes
that you can. I only insulated the exposed parts in my basement and it
made a huge difference. The walls should be the last thing you attempt
to insulate. When I had no insulation, wall insulation seemed like the
smart thing to do, but now that I have attic insulation, I doubt that
I'd ever attempt to do the walls.

If I had your house I'd start in the attic area that you are using as
storage and rip out the crappy old wiring and replace it with
individual stranded conductors (most use Romex, but I hate that stuff).
Then insulate that attic real well. Then insulate the other attic
bedroom space.