How to properly insulate a garage?
I prefer fiberglass batting over blown-in insulation because it's not as messy, you don't have to rent a machine to do it so you can do it at your own pace, and if you need to do any subsequent work in the attic, it's easier to move it out of the way then move it back  again later.  I'm not sure about the relative cost, but I frequently see special offers for fiberglass insulation in HD and Lowe's so shop around.

If you choose fiberglass, I would install the insulation before the drywall, just because you'll have more room to work in.  

A lot of fiberglass batts come with a paper vapor retarder.  Since I started using this site, I've learned to put an extra sheet of plastic between the batts and the drywall, something I'll be doing in the future.

Whichever type of insulation you go with, be sure not to block the vents.  I've used baffles to allow air from my soffit vents into the main attic space after installing R-38 batts.