I am in the middle of a home reno, and before I put up the dry wall i was thinking of wrapping insulation around my hot water lines. My thought is that I will not have to run the hot water as long before I actually get hot water at the tap. This is all just to conserve water (environmentalist in the making!).
I don't believe the cost would offset any savings you MAY get. Insulation does not "heat" the water, so after a while of setting, the water would cool off anyways. If you want cost and water savings, install a circulating pump so that the hot water is always in the lines. OR, better yet, install a pump with a convienient switch so that when you need hot water, you can hit the switch and have instant hot water without wasting water.
If you have never made a mistake, you haven't done much.