Insulation works by preventing the flow of air within your walls and floors to reduce convection heat transfer while at the same time not promoting conduction heat transfer. There are two types of insulation that can be used: loose-fill, and batt. Loose fill is made up of small pieces of fiber. Batt insulation is woven fiber to create a 16 or 24 inch wide blanket of material.
Insulation has several benefits. The most obvious is the huge savings from energy efficiency. The better the material used in your home, the more you'll save in the long run. The R-value will indicate the level of quality with a higher number meaning a better inhibitor of heat transfer.Another benefit of insulation is preventing mildew and rot. The temperature barrier prevents moisture from condensing and creating water problems. Also, heat escaping into the attic during the winter can melt snow on roof and create ice dams. Read this article from a couple weeks ago to find out more about Ice Dam Problems and Prevention. Ice dams are a good indication of not enough insulation.
A couple times a year an inspection should be made in the attic. Look for any damage or shifted sheets for batt insulation. Loose fill will tend to blow around with any strong air movement moving more material to some areas while leaving other areas bare. Even out the pieces. There's also the option of adding more material. Just make sure the pieces stay fluffed and are not compacted. Compacting insulation will decrease it's performance. Next, go to the basement and inspect the insulation in between the floor joists. Make sure there is no damage and that none of the material has fallen through the rods or netting.
Lastly, be careful whenever working with fiberglass insulation. The small particles can be very irritating. Wear safety goggles, wear long sleeved shirts, and gloves. Take a cold shower after to get rid of any of the particles from your skin. don't take a warm shower as this will open up your pores and could make problems worse.