Internal wool or fibre glass insulation need just a polythene membrane between it and the plaster wall, Why because it prevents the plaster from absorbing moisture that making the wall colder an rotting the timber baton holding the framework of the insulation.
As for the wallpaper idea its tokenism, a waste of time and effort - Depending on the covering of your external wall, if solid or cavity. My solution is a dream come true - I design build, solve problem ina wade range of areas and this is for those who want a rolls royce effec that will last a lifetime for a few pounds, One person can do it all - but neeed strength tow a doddle three times as fast.
What I did was very simple almost childishly so - and anyone can do it.
You need a particular glue, polystyrene sheets 8x4 as they are cheap as chips compared to the rest, mine is 2" thick. Glue it directly to the plaster wall - BUT prior to doing this scratch the paint on the plaster well, to provide a KEY for the glue, otherwise you are sticking it to the paint and it could or would become come detached over time. Scratching provides you want a strong anchor. Its easy to cut with a kitchen knife but be careful as you want tight joint. Once up you then buy 8X4 9.5mm plasterboard sheets to cover the polystyrene, However if the stuck polystyrene sheets are stuck horizontal or vertical you stick the plasterboard the opposite - staggering the joint as it makes it overall stronger, Look to some brickwork to see what I mean by staggering - copy that pattern
Once all done and dried you can then pollyfill just the joint till flush, Takes about 3 coverings till the joint appears seamless and then replace the skirting - glue back with left over from polystyrene to plaster - and paint it all- you would not know its there.
Just do this on 2 extenal walls.
THe cost on 12' x 12' room with 2 external walls less than £50 for the plasterboard, about £60 for the polystyrene at 1" thick £10-20 for the pollyfiller and about £70 for the glues.
If you shop around like e-bay or marketplace on facebook and gumtree -and have access to a car then you can half the price of the plasterboard and insulation or get 2" thick The glue can also be got on ebay for the plasterboard to polystyrene PVA is good enough not that good for the polystyrene to plaster – TOOLSTATION cheaper than Screwfix will sell the right tubes of glue stuff - just loads of blobs equally spaced. polystyrene to scratched wall
Job done over say 2 -3 days of disruption - you get the polystyrene and glue, scratch the walls and stick it up one day – next weekend the plasterboard, as the PVA you splosh on takes longer to stick / set than the tube glues – and on the third day paint job done.
It would take me doing it all apart from furniture clearance about a day but I would cheat and use the blob glue on both surfaces, fill it all and paint and hoover up the mess in one day. All by myself but getting the material extra time
Two people doing it so easy and can be fun will take less time too.