when we took the corner down to the studs in the small bedroom the blown-in insulation had compacted leaving gaps at the top and some had crumbled to the floor. The crumbling continued and became a issue and a pain to clean up. We decided to replace the old blown-in insulation with Denim Insulation. This stuff is awesome. No itch and easy to install. The only real drawback is that it cost about twice as much as the tried and true fiberglass. The following link from How Stuff Works covers everything you would want to know and then some about this amazing product.
Denim The New Insulation