Dave, I just love the idea of straw for insulation. I've been researching straw bale wall systems for several years, but haven't yet built anything using it. The R-value is very good, but the one facet that is mentioned over and over again in all the publications I have purchased on straw building is the moisture issue. Once straw gets wet it becomes useless as an insulator and quickly becomes a rodent and insect hazard. Most of the research suggests that it isn't any more of a fire hazard than other systems. If you do use it, you have to take steps to make sure the walls are sealed at the top and bottom, and provide enough air circulation to avoid condensation in the cavity. The experts say that simple use of tyvec and standard membrane doesn't cut it. With all that I've read, for a structure of your size and purpose I'd go with standard fiberglass bats or other traditional insulation, if only to avoid issues down the road. Good luck with the project and the new home!