Insulating the first 20' is an attempt to prevent free convective circulation / heat loss from the tank itself.
The theory (somewhat correct) is that (with no water flowing for a long period of time) the hotter water in the tank has a lower density than the cooled off water in the vertical pipe leaving the tank...so the cooled off water in the vertical riser now has a greater density than what's in the tank...so the cooled off water sinks into the tank and is replaced by recently heated water...which then cools off and the cycle continues.
As a smart guy...I believe this theory to be true.
So, insulating the vertical section near the tank...might save enough money over 50 years to pay for the 3 dollar insulation...maybe.
There is no noticeable affect/change to the amount of hot water stored.
If you want to insulate your pipes to keep the flowing water near the source temperature during very cold attic scenarios, that would be a good thing.
If you want instant hot water, install a recirculation system.
If you want to save money, turn the fucking water heater off and take a cold shower.