Here are some water heater-related links and photos I'm compiling to make the case with them.
annnnnd the links:
http://saving-energy.suite101.com/article.cfm/energysaving_water_heater_insulation_blanket
http://www.daviddarling.info/encyclopedia/W/AE_water_heater_tank_insulation.html
http://www.conservinggreen.com/waterheaterinsulationjacket.aspx
http://www.naturalbuilthome.com/products/373-water_heater_insulation
The intention is to build the case for why insulating your water heater is a good investment. Here are some photos of the local hardware store's offerings. Please note the R values and prices of these water heater sleeves.