As a licensed electrician and someone who's spend his entire adult life involved with things electrical and energy, a few observations...
1. Insulation in itself is generally a good idea if the building is heated or cooled on a regular basis. Nothing "wrong" with insulation per se.
2. Fibreglass batts, rated R3 to R4 and made by major manufacturers in Australia (Bradford, "Pink Batts" and so on) are generally the cheapest, safest and most practical means of household roof insulation into existing buildings.
3. Cellulose (shredded newspaper) is highly flammable if not thoroughly treated with fire retardent. It also ends up blowing around and sitting on top of downlights, exhaust fans and so on. It can be done well but very often it isn't.
4. Wool might not burn when it's in the form of a jumper and you're fighting a fire (wool being a good thing to wear under such circumstances) but it sure does burn when it's very loosely packed and still greasy. Be
very careful with this one.
5. Polyester - nothing really wrong with it (as long as it's a quality product) but it's relatively expensive compared to fibreglass batts. But it's a pleasant product to use (you could sleep on it if you really wanted to) so it's worth considering for exposed areas such as under floors etc.
6. Foam is another idea that's good in theory but often not so good in practice. Getting the fire retardent right is one big issue since polystyrene is inherently flammable, being a hydrocarbon product. But it can be made safe, just make sure it's not a dodgy product. Foam pumped in on-site is another matter - it depends very much on the skill of the operator and there are some real horror stories. Be careful. It's often the most practical means under floors however and worth considering.
7. Foil isn't generally the best way to keep the heat in, it will often achieve around R1 (compared to R4 for fibreglass batts) but it does have uses. It's better for keeping the heat out (so it's more use in Queensland than in Vic or Tas) although it's certainly better than nothing in the walls in a cooler climate and is quite widely used. But for a retrofit to an existing building - don't bother unless you are wanting to keep heat out, rather than in.
8 - Rockwool is much the same in practical usage as fibreglass when in batt form and also comes as a blow-in material which is more commonly used. Downsides are blow-in depends very much on operator skill.
My personal opinion is that if you are going to insulate your roof then use fibreglass batts and be prepared to DIY finishing off the installation to fill any gaps unless you find a
very good installation contractor. Other than that it's generally the way to go in my opinion.
For all insulation, keep it well clear of heater flues, exhaust fans and especially downlights. Otherwise you will quite likely need the fire brigade at some point over the next few years. I also strongly recommend that you get an inspection by a licensed Electrical Contractor (electrician) if you are installing any form of insulation near anything electrical - that will avoid the much publicised safety issues that have arisen recently.
Lighting - why anyone would install halogen downlights is something I just don't understand. Poor quality lighting, high power consumption, a known fire hazard and they let ridiculous amounts of heat pass through the gaps they create in the insulation. And they're ridiculously high maintenance too. The only thing in their favour is fashion. Each to their own though...
Get LED, CFL or even old fashioned bulbs (which these days are halogen) rather than messing about with downlights in my opinion. Unless you really do want that "commercial" look with 400 lux in the loungroom and to be forever changing blown lamps.
Solar panels - the insulation rebate is exclusive of the solar
hot water rebate with only one being able to be claimed for any particular residence. Solar PV panels, which produce electricity rather than hot water, are a separate matter and not affected by what you do with insulation or hot water. Whether or not you should install them is a matter of personal preference and finances since they will have zero impact on your day to day living. Be aware that in some states electricity utilities do everything they can to frustrate the installation of solar panels. There are exceptions, but in Victoria especially there are a LOT of horror stories. The other states it's better but it's still wise to check locally exactly what costs will be involved.
Tasmania is the only state to my knowledge where it's simple - just get the panels installed, you will be given (free) a new meter and all rates and charges remain unchanged. Your bill simply drops by however much power your solar panels produce. That said, Tassie isn't the most profitable place to install solar since the rate you will get for power sold to the grid (
the exact same rate you pay for power you take from the grid) isn't very high. Still worth looking at though and it can be worthwhile if you get a reasonable deal on the installation.
Backup power. If you just want to keep the fridge and a couple of lights going during a power failure, get a cheap two-stroke petrol generator from the hardware store for $149 and use that. Go for a quality unit such as Honda etc if it's for more regular use such as a tradesman on building sites. Get a diesel if it's for regular use and weight isn't an issue since diesels use quite a bit less fuel than petrol.
Don't mess about with batteries connected to solar panels unless you're not on the grid or you get a
lot of blackouts and want uninterrupted power without having to wait for a generator to start. It doesn't stack up economically or environmentally to have large batteries in most circumstances - keep this idea for those off the grid.
Hot water. In some states it's cheaper to go solar than to replace a failed electric HWS with a new one the same, so it's certainly worth looking at. And if solar isn't an option due to the roof direction etc then a
quality heat pump will still save 70% on energy consumption and attracts a $1000 rebate plus REC's.
Just keep away from the big name, lower quality units that don't work on off-peak electricity and which use booster elements during Winter - they'll end up costing you as much or more to run than a conventional electric off-peak water heater.
Also keep away from solar HWS that rely on peak rate electrical boosting unless you live somewhere that regular boosting is not required or have no other option and would otherwise use that rate for a conventional electric water heater. Boost with gas or off-peak electricity instead - yes there are systems that can do this, don't believe salespeople saying otherwise and advocating peak rates.
My own situation? Ceiling insulated with fibreglass batts, walls with foil, nothing under the floor at pesent. Heating is wood and electric in the house, oil in the workshop / garage. Hot water is heat pump on off-peak installed 2 months ago. Have a 1kW solar PV system (grid connected) on the roof. Lighting is just conventional lights with bulbs - I don't see any real reason to change them until LED's drop in price.