OK, I will stay away from Whirlpool and Kenmore and stay with 6yrs. Also, we will go for a 50 Gal instead of 40 by recommendation of a plumber.
Generally that is the way to go if there are any substantial tubs to fill, multiple showers running for extended periods, or if the home might be sold later. The extra heat losses of 50 vs. 40 are typically small--much of the loss comes from having a tank period--fittings losses, the central stack and combustion chamber losses, etc. are essentially fixed/independent of tank size.
How much will be the savings on 2" insulation? A 2" insulated WH will be about $200 extra. I guess if I can make it last for at least 10 yrs, that will be require a $20/savings per year.
The difference in pricing for higher/lower effic. you are seeing is about twice what is showing up for HD online here, but this is likely based on store pricing/availability.
Even at $100 difference it is difficult to payout with today's cheap nat gas. Houston is going to be warmer on average than what is used for the national Energy Guide calcs. The Energy guides for the thicker and thinner insulated tanks show 242 and 258 therms annually (roughly 1 ccF of gas per therm), so the delta could be as much as 16 therms. Our gas is charging out between $.5 and $.6/ccF at present. So for me it would be about $10-8/year. It would take at least 10 years to pay off...unless nat gas prices begin rising.
But the real kicker is that you can do pretty well with a simply insulating blanket on the lower effic. tank--this runs about $20-25 bucks. It should give you about 3/4 or more of the effect thicker manufacturer built insulation.
Dana's recommendations with regards to insulating lines and projections are the same I would make--essentially it is what I have done. I obtained some non-flammable/non-melting pipe insulation to wrap the lines in the first few feet next to the flue as well. It is important not to put anything meltable or flammable there as any sort of back draft condition will create a fire hazard. I helped my neighbor identifying this very sort of problem recently.