I spent a few hours yesterday researching this question and the answers, but it seems because specifics vary, so do the answers. I'm a homeowner, in northeast Ohio, who plans to add a 1300sq.ft. "in-law suite" addition to an existing house. For a couple of reasons, this addition will require its own system, and since it is electric only, I've decided on a heat pump system (the main house has one, and we're happy with it). The addition (one floor) will sit on an enclosed, insulated, and unvented crawl space, with a vapor barrier, and a concrete floor. The space is approximately 48" high, and will extend approximately 36" below grade. I've gotten two bids for systems, that look good to me, but one contractor is convinced that the duct work must be insulated, and the other is equally convinced that it should not be. Both intend to put registers in the crawl space ducting. There is a money difference, of course, that I will be willing to pay, if I can determine that I will legitimately get a benefit from, but I don't want to spend if I don't need to. This addition is approx. 30'x40' and the fan coil will be pretty much centrally located in the crawl space. Which is better, in this application, and why?