The FAMILY HANDYMAN had a special segment a couple of months ago about this subject.
The suggested using this exterior 4 x 8 sheets of wall board insulation. Nail this to your walls, then hang up 1/2 inch drywall and you should be fine. Now, consider this, you will increase the width of your walls considerably, this will effect your doors, windows, and floor molding. This will be something to think about. Especially the door molding and the door itself.
I am sure that others will chime in on this with new options with less painful side effects.