exposing ceiling rafters...

Hey all. I just bought a house in the Downtown Phoenix area. I'm making an honest attempt to learn this DIY home remodeling stuff myself but there seems to be a shortage of reliable information online. I've bought a few books but information always seems to be incomplete. In any case, what I'm thinking of doing is exposing my ceiling rafters and creating more head room in my living room. I've seen this done in a lot of houses and commercial buildings around me and it doesn't seem like an unrealistic goal.

Please bare with me here. I'm a total newb and I'm really not sure what I'm doing yet.

The house in question is only 608 square feet, was built in 1941, and has a peaked roof. The rafters are in okay shape. I plan to paint it all black.

1.) I don't want to remove the ceilings in the back of the house. The back two bedrooms and the bathroom are fine the way they are. How do I close the attic space above the bedrooms and bathroom from the living room and kitchen in the front of the house? Do I drywall up to the peak of the rafters? Do I leave it open and make it a crawl space? How about a loft?

2.) There are vents in the front of the house. What do I do with these? Do I seal them off? Do I turn them into windows? What do I do?

http://www.jmsacandheating.com/tips/images/atticventilation.jpg

3.) Insulation... I've seen in other places that insulation was put into the peak of the roof in between the rafters. What would be the best type of insulation to use? Cheapest?

Thanks guys. I'll take any advice I can get. Even if you tell me to "go to the library". Feel free to be rude and/or condescending. I'll also take book recommendations, etc.

Thanks.

Before you worry about insulation, you have to compleyely understand what you are doing to the structure of the house. The ceiling joists that would be removed are holding the outside walls from pulling apart. So you have to figure out how you are going to hold the house together. You will be adding cross ties across and create a new ceiling some what higher than the old one. To add insulation to the sloped part of the roof, you will need to add height to the rafters for insulation. You want to have an air space between insulation and roof sheeting. Between this area and the rest of the house you just build a 2x6 wall from the top of the bedroom wall to the roof, insulate that and drywall the livingroom side.