There is only a modest amount of sound insulation that you will get from using fiberglass insulation. A better insulation for that purpose is a product known as Roxul but I don't know if it is available in your area. Instead of being spun glass fibers, Roxul is made from a certain type of rock. Google Roxul and you will see what I am talking about.

There is no hazard of any kind to have either type of insulation tight against hot or cold water lines of any type nor ABS, PVC or copper drain pipes. Insulating the hot and cold pipes with pre-formed foam insulation is a good idea from two aspects. One,it will help to cut noise from water rushing through the pipes and two: it will help keep the hot water hot in the pipe.

If you really want to soundproof the wall, you have to use special sound-deadening panels, Z-rail and multiple layers of drywall. I recently had to do this in a dedicated home-theatre room in a friend's basement. We also stuffed the wall cavity with six inches of Roxul so I suggest that you do the same.

Your contractor is a moron. Fire him/her if they haven't started yet. Yes, they are trying to get out of work, or they really ARE morons.

Insulating hot water pipes is a GOOD idea - in fact, it appalls me that there's so much empasis on insulating houses to save energy, yet this critical adjunct to saving energy is overlooked.

FIbreglass CAN help with sound but it's true, other materials may be better. Certainly though, using fibreglass is not going to cause any problems.

If this so-called 'contractor' is doing the plumbing, make sure you inspect the pipes before they do get covered with insulation.

The foam sleeving does do a good job on hot water pipes, if you just want to save energy.

There is no reason in the world that you cannot use fiberglass insulation with copper pipe. In fact,While the plastic foam materials are more commonly used in residential work they do make preformed fiberglass insulation specifically for insulating pipes.

One word of caution..If this is an outside wall the insulation should be put between the pipe and the outside wall but not on the inside wall side of the pipe. The reasoning here is to keep the pipe in the heated envelope of the house to prevent the possibility of a line freezing in winter.

Over on Fine Homebuilding's Breaktime forum, there was a recent discussion about the use of Grace Ice & Water Shield as a soundproofer for plumbing stacks - apparently it works similarly to the products used for auto sound-deadening (cf. Dynamat). Apparently, it works like a charm. Not quite as cheap as fiberglass, however. : )

Jason

Here is a link that might be useful: Breaktime Forums