Insulating Pipes

According to energy experts, the only pipes worth insulating in the basement are on the hot water heater, both the first 6' of the hot water supply, and 3' of the cold water return.

These pipes are  full of water and as the water cools, it drifts down into the heater, cooling the water in the heater.  Meanwhile, hotter water from the heater rises up to take the place of the cold water.  It creates a convective loop that keeps adding cold water to the heater.

The reason why it's not worthwhile to insulate other pipes in the basement is because heat rises into the house.  So long as the pipes are inside the building and under or within the living space, you shouldn't insulate them.  The heat will, in the end, still warm your building up during the winter.

However in crawlspaces that are to the side of your home, or attic spaces that are above your home, you want to insulate all the pipes, because the heat lost here will go outside of your house and do you no good.

To install: Measure the length of the pipe you want to insulate.  Cut a piece to fit with scissors or a utility knive, then open the insulation tube up by running your finger inside it and ripping open the pre-cut seam (you should be able to see this seam).  Where the pipe takes a turn, cut the insulation to have a 45 degree angle so the insulation will fit together neatly covering the whole pipe.  Tape the edges together with foil tape (lasts longer than duct tape).

Don't put pipe insulation on a pipe within 6" of a gas vent.  It can melt from the hot air venting.

Don't insulate steam pipes or any pipes that get hotter than 120 degrees F unless you have the right kind of insulation. The insulation will melt otherwise.

http://www.raftertales.com/home-improvement/plumbing/pipe-insulation-do-it-yourself-guide/