The foam sleeves are generally more effective and much easier to install. Before purchasing the foam sleeves at your local hardware store, measure the diameter of your pipe. Sleeves come in varying sizes to accommodate the different diameters of pipes. For maximum energy savings, you will want to ensure a snug fit. Before you insulate water pipes, check for and repair any leaks.
Wet insulation is rendered useless.
Generally speaking, the first fifteen feet of pipe should be insulated, if accessible, because this is where the most energy is lost. It is also a good idea to insulate the first four to six feet of cold pipe where it enters the tank. Heat from the tank can often be conducted back up the cold inlet pipe. If the inlet pipe feels hot or warm to the touch, it should be insulated. Insulating your hot water pipes will not only reduce your energy bills, but will also allow you to get hot water more quickly when you need it.