My house is very old and:

1. 2 stories with flat roof. 
2. Roofer added 6" of styrofoam between plywood and tar/gravel.
3. The roof is about 1400ft2  with 3 metal chimney shaped roof top vent, plus vents on the side.
   
4. Distance between the roof and ceiling there are about 14" for about 600ft2 and 8" for the other 800ft2
   
5. No wall insulation.

Questions:

1. Some contractors said that I don't need to add cellulose on top of the ceiling since I have 6" of styrofoam; some said I need to put just  a few inches, some said to fill all space in between the roof and ceiling and close off the vent.
   Which one is correct?
2. Wall insulation, I have some knob/tube wiring in between walls.
   Some contractors said it's OK some said I need to rewire them all.
   Which one is correct?
3. Is cellulose the best option?

Thanks for helping, I am so confused.

6" of styrofoam gives you about R25. Most parts of the US call for R38+.

With cellulose in FLAT roofs (and in cathedral roofs in some climate zones) you need to leave an air gap between the top of the cellulose and the roof decking to avoid rot issues in the roof deck itself. It's also best practice to stack it up such that the average winter dew point of the interior air is within the foam, not the cellulose or roof deck. With R25 of styrofoam above the deck, in Portland OR you're fine as you don't go more than ~R25 on the cellulose end, which would be about 7" and would leave some gap, but it may be difficult to control.

DO close off the vents, whether you add celiing insulation or not. The purpose of the vents is gone once you've insulated the roof from the outside (and R25 of unbroken foam outperforms batts between rafters at much higher R values.) The ventilating the roof deck is just defeating the porformance of the styrofoam here.

Insulating over knob & tube is illegal in most places, but the basis for it is not well founded. (There is a theoretical possiblity of poorly spliced knob & tube overheating to the point of ignition if thermally insulated, but SFAIK there are as yet no known instances of that actually occuring.) Running new wire and decommissioning the K & T removes all question. Cellulose in the wall cavities would be my preference, since it offers hygric buffering and adds thermal mass, but blown fiberglass works too, with a very slightly higher R-value. Slow rise/low-rise foams are wicked expensive, and if they screw it up, difficult to fix voids (or worse, blowouts of the walls!) I don't know if OR allows insulating over K & T, but your contractors should, since they'll be on the hook for it if (in the unlikey chance) there should be a problem.

If you have any recessed lights in there, fuggedaboudit until/unless you replace the fixtures with air tight insulation-contact versions.

With R25 already on the roof and nuthin' in the walls, you'll get your best bang-per-buck by closing off the roof decking and insulating those walls- it'll be HUGE! I'd go there first- defer what to do about the ceilings until you're ready to gut 'em or to a major remodel. Once the walls are done (or as part of the project), air-sealing the place will have as-much an effect on performance. Before/after blower door tests to prove it is in order. Blowing insulation into the walls will reduce the air flow by quite a bit (especially if it's cellulose), but air-sealing is important, even if you don't get around to wall insulation for awhile (it's the single-most cost effective measure for most old houses.)

Hi Dana1, thanks for helping out.  I just want to clarify:

1. You are suggesting to have 7" of cellulose on top of the ceiling but under the roof deck?  In my case, that would leave about 2-4" of space between the top of the cellulose and the roof deck.  
   
   I am assuming the space is for breathing and avoid condensation?
   
   
   
2. You also suggest to close off the vents.  I have two types of vents:
   -metal chimney like roof top vents
   -openings on the side of the house
   
   close them all? or just the metal ones?
   
   
3. If I would to close them all.  The 2-4" mentioned in (1) would be a space that can't breath.  Wouldn't that cause condensation issue?
   
   

Thanks again for helping out.  i am so confused as contractors gave different opinions.

Some contractors said that I don't need to add cellulose on top of the ceiling since I have 6" of styrofoam; some said I need to put just  a few inches, some said to fill all space in between the roof and ceiling and close off the vent.
Which one is correct?

R-25 styrofoam wouldn't be a bad insulation level, but right now with those vents in your ceiling, you have a lot closer to R-2 or R-3. Close off all the vents (they aren't venting the roof deck anymore, they are venting your house).

The next step is to insulate the perimeter of the roof deck to the ceiling, and add some more insulation to the ceiling. While R-25 is a lot better than nothing, you can still get a great return on your investment on up till R-40 or R-50. However if the budget is VERY tight, be sure to get the perimeter of the roof to ceiling and focus your efforts on the walls.

If it were me, I would just blow the thing full. There really isn't a huge amount of area there. Be extra sure you get the perimeter walls blown thick enough that it wont compress.

If you didn't want to blow it full, use a layer of batts on the perimeter walls and whatever thickness you want on the ceiling. Cellulose isn't really an option here, because the added weight is likely to bow the ceiling of this older home, unless you are willing to add plywood to the ceiling and re-drywall over it.

Wall insulation, I have some knob/tube wiring in between walls.
Some contractors said it's OK some said I need to rewire them all.
Which one is correct?
Replace all the knot and tube wiring with regular insulated wiring, and put some fiberglass batts on the exterior walls. There might not be anything "technically" wrong with the knot and tube, but why play with fire? Especially if you are about to add a bunch of stuff that would be touching it. All it would take is a leak to let some water in the wall and you would be finding out the hard way that insurance doesn't pay enough to build back what you had before.

What aardvarcus said, in-re the vents- close them ALL off- they're killing your roof insulation's performance!

If the ceilings are plaster & lath they'll take a half-foot or more of cellulose just fine, but if you split the R value such that you get condensation in the fiber layer, having it in contact with the roof deck will create rot conditions, since it'll wick readily. (Full roof deck contact with fiber insulation is simply not allowed in flat roofs in MA, even though there's some evidence that dense-packed it's fine if you control the indoor RH to no more than 25% in the winter. Same for cathedralized ceilings, unless foam provides more than 40% of insulation value, which would be the case for your flat roof.) If it's a sheet rock ceiling, yeah, it'll sag over time, especially if dense packed (3lbs+/ft^3). 7" of loose filled (1.5-2lbs/ft^3) would get the total close to R50 at half the weight, but without insulation in the walls and a fairly tight house the payback just wouldn't be there.

I'm not sure how you'd get batts in there without gutting it. But aardvarcus makes a good point- on the perimeter you can blow the last joist bay full of cellulose with relatively low (but not zero) risk of spot issues. At the ends of the joist bays, a 1.5- 2" hole bored in the ceiling ~6" from the wall allows you to insert a bag and blow it full of cellulose as insulation + air-block. (Most cellulose installers understand how to do this.)

As for the K & T- I too would rip it out were it my place. Be sure your insurers are on-board with it if they blow over K&T. (IIRC Ohio repealed that due to lack of credible evidence that it's really a problem.) This discussion has been going on for well over a decade (it was only drafted into code in 1987):

http://www.homeenergy.org/archive/hem.dis.anl.gov/eehem/96/960502.html

Do note, any cellulose use should be specified to be sulfate-free. In the presence of moisture sulfate fire retardents will corrode metals, some more than others. (Copper plumbing and wiring, BIG TIME! ) Wet-spray cellulose uses only borates as a rule, and works just fine dry-blown, but some manufacturers offer sulfate-free dry blow formulas as well. Of course your walls and roofs never leak, so sulfates are never a problem right? (RIIIIIIGHT...) Sulfates are outlawed in Australia for insulation fire retardents, and you know that must be because Australia is damper than Portland, eh? ;-)

A quick google on the K & T issue in regards to Oregon came up with this:

"On 10/11/90, the State of Washington amended NEC 324-4 as follows:

The provision of Section 324-4 of the National Electrical Code shall not be construed to prohibit the installation of loose or rolled thermal insulating material in spaces containing existing knob-and-tube wiring provided that all the following conditions are met:

(1) The wiring shall be surveyed by an appropriately licensed electrical contractor who shall certify that the wiring is in good condition with no evidence of improper overcurrent protection, conductor insulation failure or deterioration, and with no improper connections or splices. Repairs, alterations, or extensions of or to the electrical system shall be inspected by an electrical inspector as defined in RCW 19.28.070.

(2) The insulation shall meet class I specifications as identified in the Uniform Building Code, with a flame spread factor of twenty-five or less as tested using ASTM E84-81a. Foam insulation shall not be used with knob-and-tube wiring.

(3) All knob-and-tube circuits shall have overcurrent protection in compliance with the 60 degree C column of Table 310-16 of the National Electrical Code. Overcurrent protection shall be either circuit breakers or Type S fuses. The Type S fuse adapters shall not accept a fuse of an ampacity greater than that permitted in this chapter.

Following on the heals of Washington State s success, the State of Oregon amended the state code in a similar manner:

The provisions of Section 324-4 shall not be construed to prohibit the installation of loose or rolled thermal insulating material in spaces containing existing knob-and-tube wiring provided that all the following conditions are met:

(1) he visible wiring shall be inspected by a certified electrical inspector;

(2) All defects found during the inspection shall be repaired prior to the installation of insulation.

(3) Repairs, alterations or extensions of or to the electrical systems shall be inspected by a certified electrical inspector.

(4) The insulation shall have a flame spread rating not to exceed 25 and a smoke density not to exceed 450 when tested in accordance with ASTM E84-87. Foamed in place insulation shall no be used with knob-and-tube wiring.

(5) Exposed splices or connections shall be protected from insulation by installing flame resistant, non-conducting, open top enclosures which provide at least 3 inches, but not more than 4 inches side clearance, and a vertical clearance of at least 4 inches above the final level of the insulation

(6) All knob-and-tube circuits shall have overcurrent protection in compliance with the 60 degree C column of Table 310-16 of NFPA 70-1990. Overcurrent protection shall be either circuit breakers or Type S fuses. The Type S fuse adapters shall not accept a fuse of an ampacity greater than that permitted in this chapter. "

The one problem you can run into with K+D , is the type of wall installation method. The best way to inject cellulose or fiberglass insulation is thru a clear tube installed into the cavity. This can be a problem sometimes with K+D.

Thanks guys for your help. So I should understand that I would be OK to seal off all the vent and don't have to worry about condensation?

Thanks again.

Short answer, yes, seal it up, don't worry about condensation.

Longer answer (without the math and psychrometric charts :-) ):

Condensation occurs when warm air from the interior encounters a surface that is below the dew point (cold).  The roof ventilation mixes cooler drier exterior air with the interior air it encounters, diluting it, then drafting it out, to limit the amount of condensation that can occur, and drying out the space.

With the insulation on the exterior of the roof deck is WARM, above the dew point, and condensation doesn't occur.  The more insulation you put between the ceiling and roof deck, the cooler it becomes, and the more susceptible it is to condensation from any interior air that infiltrates through the ceiling insulation.  But as long as the roof deck's average temp stays above the average dew point of the interior air, any condensation that occurs is short-lived and causes no damage.  If the average temp of the roof deck is BELOW the average dew point of the interior air, it becomes a weeks/months long repository for humidity condensed from infiltrating interior air, and rots.

Flat roofs are more problematic than pitched roofs because they have vapor-impermeable roofing, and practically no capacity for drying toward the exterior.  In a pitched roof structure with semi-permeable roofing felt on the roof deck and air barriers + vapor retarders on the interior ceilings the roof deck can pass any minor humidity that finds it's way from the interior into the the roof structure.  Flat roof structures need to be able to dry toward the interior, and highly vapor retardent materials should not be used on the ceiling (no foils, vapor-retardent paints, poly sheets, etc.), otherwise  the assembly becomes a moisture trap, with a high risk of rot.

All the contractors that I have called told me that I wouldn't need a permit for insulating the house. However, when I called the city. they told me that yes permit is needed, damn.

The inspector also told me that for ceiling/roof, there MUST be at least 2" between the top of cellulose and roof deck and those 2" or whatever space MUST be vented. That means I have have at most around 9" of cellulose which is R30?

It seems like either i risk it and do not pull a permit, then fill the whole space with cellulose and close off all the vent to maximize my R value (12" cellulose + 4" foam = R60??)

or

I pull permit than settle for R30?

My roof area is 1400 ft2. R30 vs R60, what is the energy saving anyways?

There is NO science to support a requirement for ventilating the gap when you have R25 above the roof deck and R30 below.  If they're going to be obstinate about it, you're better off sticking to the R25 styrofoam you already have and blocking the vents and forget about blowing insulation between the joists.  It's still worth insulating the band joist around the perimeter.

As for the energy loss, a rough approximation can be had by plugging in the numbers into the spreadsheet here:

http://www.builditsolar.com/References/Calculators/InsulUpgrd/InsulUpgrade.htm

Portland has about a 5000HDD climate, and assuming you're running an 80% AFUE old-skool furnace or boiler, the difference between R25 and R55-60 for 1400 square feet will be on the order of 45-50 therms (or CCF) of natural gas.

The cost of continuing to ventilate the ceiling joists is well over 100therms, it may be over 250 (!).  If you went ahead and insulated to R30 of cellulose below the ventilation and continued to ventilate that loss would be reduced substantially, but the net gain in overall performance compared to just closing the vents and NOT insulating would likely be 10-20therms, best case. 

Apply the money you save from not adding insulation the ceiling toward a properly-sized (for the new-improved insulation level) high efficiency gas furnace/boiler and you'll get better bang/buck, ROI, etc.  If you have a full basement or crawl space, foam-insulating/sealing the sill & rim joist would be cost-effective @ similar or less cost. (If you have uninsulated basement walls, that's also significant.)

But the improvement from upgrading your walls from ~R2-4 (uninsulated) to ~R12-14 (insulated) will be HUGE!  You likely have more wall surface area than ceilng/roof area, and it's running at much higher heat loss per square foot.  Cutting that loss by 70-80% is much bigger than cutting the loss through the ceiling by 10-50%.  Make that your insulating priority for now, fight the other battles later.  (Rome wasn't built in a day, and if it had been, their contractor's phone would be ringin' off the hook, eh? :-) )

Addendum:

Seriously- if your existing walls are performing at R4 (which they might, on a good day), assuming windows & doors reduce the studwall area to as low as 1000 square feet of upgradeable area, insulating that 1000 square feet is good for saving ~200-250therms/year. If it's leaky-as-hell construction with no-fire-blocking and thus only delivering ~R2, insulating them with cellulose will be good for saving 500 therms/year or more.

Do you have a fuel-use history on this place, for comparison?

Do you have reasonably tight double-paned windows (or storm windows) already?