Options:

• Straw bale
  • + Recycled material
  • + R30-R35 insulation
  • + Flame retardant
  • + Thick walls
  • - Moisture is very detrimental, extra work is needed in planning to avoid water (overhangs on roof, no piping running through walls, etc.) and to maintain. Might not be appropriate depending on rain/humidity in area
  • - Might not get approved by municipality
  • Prefabricated straw bale panels described here here seem to address all cons related to standard straw bale construction
• Dense-packed cellulose
  • + Insect and rodent resistant
• Pre-fab
  • Quicker, can be LEED certified
• Living wall
  • + Looks nice
  • - Doesn't do much for air purification
  • - Probably expensive, $35-200 / sqft

Conclusion: Prefabricated straw bale panels seem like the best option. Living plant walls can be installed later on.

Cost: $39,000 = $18 / sqft of wall space * 2160sqft. Wall space = 900sqft of floor space = 30ft * 4 perimeter * 9ft wall height * 2 floors = 270 sqft * 8 = 2160sqft.

References:

• Straw bale construction
• Straw bale walls
• Ecohome building envelope