I agree with bobf. I use 2" foam, spot glued directly to the concrete wall. This eliminates all the debate about vapor barriers, condensation, etc. THEN, I just build a 2x4 (or 2x3 if you want to save an inch) wall and attach it to the floor and ceiling, forgetting about attaching it to the wall. This way, I have room for duct work, wiring, etc. etc. I figure, with interior partitions that you are speaking of, only two walls in a room will be concrete - so, if you start out with exactly a 12' x 14' room, partition to concrete, firring method with 1/2" drywall your room will finish out to 11'-10" x 13'-10"; my method, your room will be 11'-6 1/2" x 13'-6 1/2". Basically, my room is 3.5" smaller in both directions, so what? Who would notice? Plus you have no moisture/condensation issues where your strapping was, since it provides no thermal break, and you have no wiring or duct issues. The other posters' strapping method is fine, I've used it many times and it works fine. I don't mean to sound harsh - I just like my way better, that's all. Drop ceiling works great, I would go with the 2'x 2' tiles, as the main supports are the same, you just need more cross Tee's - 2'x2' tiles are easier to sneak into place when you want to keep your ceiling up as close to the floor joists as possible. If you have a blown hot air furnace, I would just cut in a couple ducts into your main zone's supply and return and put these dampers on the supplies: http://www.jacksonsystems.com/zone_one.html Keep your returns down low to take out cold air. If you don't have air heat then I would either put in electric or hot water baseboards. Be careful with any portable space heaters, they can be dangerous. Good luck!