Vapor barriers are a 2-edged sword, and are responsible for creating as many problems as they've solved. Air moves more moisture into wall cavites than vapor-diffusion, but vapor diffusion is still the primary way the moisture gets back out.
Fiberglass batts are not very air-retardent compared to rock wool batts or blown cellulose. Air leaks to the outside can result in a significant loss of thermal performance to convection, and air leaks to the interior can result in wintertime moisture accumulation in the sheathing. Making each stud bay as air-tight as possible is important for both thermal & moisture handling performance. Caulking the studs to the sheathing at every stud-bay seam with an acoustic sealant type caulk is a huge improvement. If there are lateral seams in the plywood, sealing them with fiber-reinforced duct mastic would also be important. Use fire rated can-foam to air seal all electrical & plumbing penetrations of the framing, as well as the back-sides of electrical boxes, etc.
If re-using the (likely R11) batts, or replacing them with better higher density stuff, make sure to tuck them in firmly taking care at the corners, so that full contact with the exterior sheathing is assured, then tug them back out to where they're just proud of the stud so that when the wallboard goes up it's in full contact with the gypsum. Split the batts over lateral wiring & plumbing, and trim to a snug fit around electrical boxes. Any gaps you leave have ZERO air retardency, and it doesn't take much to end up with significant convection loops that bypass the batts entirely. (Even the pros aren't always good at detailing them correctly.) If a batt is too short to fit snugly at the top & bottom, cut some new stuff in to fill the void without bunching. Any batts that are too long and bunched at the ends, can be trimmed to get the wave out of them.
Be sure to lay a bead of caulk in the seams between doubled-up top & bottom plates of the framing, as well as between the bottom plate and the subfloor, as these end up being long skinny air leaks of suprisingly large cross section.
With 16" o.c. framing, when all window framing headers jack studs etc are accounted for the total fraction of the wall area is about 25% for most houses. At a 25% framing fraction, with plywood sheathing, wood clapboards/shingles, and half-inch gypsum on the interior the "whole wall" performance of a studwall with R11s runs about R9. If you swapped out the R11s for R13s it would only raise it to R9.5, and if you swapped them out for high density or rock wool R15s you'd be a hair over R10. The low increase in R-performance is due to the 25% of wood, which runs only about R4.2 for fir or hemlock 2x4s (a bit lower for douglas fir). Even at R-infinity between the studs you can't perform better than about R18 with 2x4s and a 25% framing fraction.
But if instead of a poly vapor barrier on the interior you installed a half inch of foil-faced polyiso, that R9 wall becomes R12, a 25% improvement in thermal performance. If you can afford to give up a full inch, adding an inch of polyiso brings it up to R15, a 40% improvement in thermal performance (and would bring it up to IRC 2012 code minimum performance.) But with a foil facer (a true vapor barrier, like polyethylene) air-sealing the interior takes on greater performance, since air leaks would let the moisture in during the winter, but it can't dry toward the interior, only toward the exterior, which will be slower, so you need to take great care to tape all seams with FSK tape, and use appropriate can-foam & caulk to seal around electrical boxes, etc.
If you really can't give up even the half-inch of interior space, instead of polyethylene sheeting, use a "smart" plastic film product such as Certainteed's MemBrain, or Intello, DB+, etc. If you can't find a local source for MemBrain (check with contractor supply distributors, not box stores),
475 carries some of the others.
Air sealing all of the attic penetrations is important before adding insulation there, since more insulation means a colder attic, which means the wood will have a higher risk of moisture accumulation & mold from air leaking up there in during the winter. Air leaks at the attic floor and into the basement tend to have much higher air flow than equivalent sized leaks in walls due to the "stack effect" pressures that will cause air to move 24/365, even without wind. Big offenders in home of that vintage tend to be plumbing & electrical penetrations & chases, flue chases, and (a really big one in many ca. 1968 homes) recessed lighting fixtures. Short of replacing the recessed lights with newer gasketed air-tight fixtures, taping the seams of cardboard boxes with housewrap tape and sealing them to the ceiling gypsum with can-foam works. To meet code there needs to be 3" of clearance between the lighting can and the cardboard, but you can then insulate over the cardboard as much as you like.
Air sealing around flues needs to be done with sheet metal, with muffler-seal putty or other refractory cement at the connection with the flue, and fire-rated can foam where the sheet metal meets wood/gypsum. A wrap of R15 rock wool batt (Roxul is now available at the bigger box stores) around the flue secured with steel wire then allows you to achieve full insulation coverage.
At plumbing & electrical chases cardboard air dams caulked and stapled in place works, with can-foam where the plumbing penetrates the cardboard.
Any gaps in batts are triply bad in attics, and without a topside air-barrier batts do not perform to their specified R-value. It's FAR better to use blown cellulose (and not fiberglass) in attics than fiberglass, due to is superior air-retardency, and the fact that blown insulation will automatically fill in all performance-robbing gaps & compressions. If you blow at least 3" of cellulose over a low-density batt it's as good as a true air-barrier from a thermal performance point of view. The higher density of the cellulose will cause the fiberglass to compress a bit, which gives the fiberglass layer a higher R/inch, but a lower R now that it's thinner. The key is the total combined depth.
Most
box stores that carry cellulose will give you a day of free blower rental with as little as $100 worth of cellulose, and it's not rocket science to do open-blown cellulose. Pre-install cardboard or foam chutes at the soffits to preserve soffit venting and keep the roof deck clear of the insulation, and place depth gauges (a sheet of cardboard with a couple of depth marks stapled to the joists is just fine) every 8-10 ' or so, then blast away, filling it as evenly as you can, raking it smooth & even with a lawn rake as you go. It's easier with 2 people, one to keep the hopper filled at the blower, the other working the business end of the hose.
IRC 2012 code min would be R49 in CT, which would take a combined total initial depth of ~14", which will settle to about 13" over the next decade, assuming you're blowing over pre-existing low density R19 (~6" thick) batts. It may not be possible to get it that thick right at the soffit edges, and if your joists are only 2x6s it may be worth cutting and stacking polyioso foam insulation on top of the studwall plates at the eaves to keep it from becoming an ice-dam forming thin-spot. Assuming you're starting out with 6" batts you'd be adding about 7-8" of cellulose (since the batts would compress to between 5-5.5" over time), which works out to about 0.8 lbs per square foot at open blow density. So in 25lb bags, so a 1000 square feet of attic would take about 30 bags, at 10- $12/each, call it $300-350 worth of material per 1000'. If by some fluke you actually have R25s (fits 2x8) or R30s (fits 2x10s) up there it'll take a bit less.
Properly air sealing around window & door installations can be tricky. The best approach when you have it open from the interior is to wedge
backer rod into the narrow space between the window unit and the framing, followed with a bead of low-expansion flexible "Windows & Doors" can foam, then packing shredded batt material in there fairly tightly. With the fiber, worry more about getting a complete fill than maintaining loft- fiberglass increases it's R/inch and becomes more air-retardent with density- as long as it still has some spring to it when pushed with a finger it'll be between R3.5/inch to R4.2/inch, and even wadded so tight that it won't spring it'll still be over R3/inch. There IS an optimal density, but that density is typically 2x that of an R13 batt, and nearly 4x that of an R11 batt.
The other truly large air leak in houses with full basements is usually the foundation sill & band joist, but I won't detail what it takes there just yet. Bear in mind that basement walls & band joists can easily end up being 20-25% of the total heating bill once you've brought the rest of the place to snuff, but I'd need more info on yours to say for sure the best method forward on that front, and it's probably pretty low priority while you have the first floor gutted.
Is the place heated with oil, gas, electricity or ??? (And how- baseboards, ducts, radiators?) Does/will it have central AC?