I think siding does a couple of things, like (on one hand) protecting the wood from the elements, and adding very minor insulation value, but I also think it can lock in trouble, whether 6-legged or wet, so there are considerations to deal with. You say the wood's in good condition - how is the other side of it, in other words what's going on inside between it and your walls? Has it been looked at since l916?

I wouldnt use improved insulation as a reason to get siding at all. Its a bad ROI since the foam that is used is so thin with little R value. JMHO

Nope. Probably hasn't been looked at on the other side since it was put up. By 'good condition' I mean it's not visibly rotting.

I'd hire a good painter and have it done right. A good proper paint job should last well beyond the time line you've mentioned to be out of the house.
Once you put siding up you limit your buyer pool. Old house lovers will hiestate to buy for fear of what might be underneath. Others will either not like the color or the siding and find it hard to justify removing it to change and and so will pass.
Paint on the other hand can easily be changed. I'd stick with the paint.

I'm with everyone who says don't do it. Hire a good painter and do it right. Our village's historic preservation commission recommends homeowners who are considering siding take a look at this article from Connecticut's Trust for Historic Preservation....

Please show this to your husband, too.

Here is a link that might be useful: the real issues with vinyl siding