It varies between application.
On non-cross flow MG B-series engines, it appears to reduce power, and cause problems with exhast valve failure.
On turbo's it seams to help.
The heat is dispensed by vibrating molecules (convection). You've got to ask where the heat goes when the exhast manifold is wrapped. If it doesn't soak back into the exhast valves or combustion chambers, then its all good. In non-cross flow engines, it may just releflect it back to the intake (by convection through iron and/or alloy) even if the air temperature is less in the engine bay.
Each exhast gas temperature (EGT's) needs to be tested with a pyrometer/ platinum resistance thermometer or temperature bridge linked to a gage, Fluke meter, volt meter or data logger. Then the engine needs to be tunned to suit. Adding thermal rap may help or hinder EGT's. When they go up beyond a certian level, they cause power to drop, and engines to pop!