The basement finishing is officially underway! 

The lumber and insulation boards were delivered on Saturday...so on Sunday I cleaned up the besement (threw a bunch of stuff away), moved everything to the center of the room, covered everything with protective plastic and started insulating the foundation walls.

I went with 1" thick 4'x8' sheets of Dow styrofoam insulation board (R-5).  It has a built in vapor barrier on both sides of the board and is easy to install...just use foam board adhesive and stick it right to the foundation walls.

The framed walls will be 2x4 studs and will go up against the insulation board, and I may install batt insulation in the wall cavity to bump up the R value.

I'm putting up the full sheets of insulation first, then going back and cutting strips for the areas where full sheets wouldn't fit.

I severely underestimated the amount of adhesive needed for the insulation.  
Surprisingly, one tube (it's just like a tube of caulking) of this stuff only covers about 1 1/2 sheets of insulation.  I bought five tubes, thinking it would be more than enough for 15 sheets...not even close.  I'm going to need about five or six more tubes of this stuff.