One of the advantages of removing the original dry-lining is to save on internal space.
If there is a vapour barrier immediately inside the new dry-lining this should resolve condensation issues under most circumstances.
You say that you have cavity block walls, you should check out the differences between the final u-value ratings on the exterior walls if you,
i) Just get the cavity between the block walls insulated, or
ii) Insulated the interior walls
The cost of insulating interior walls correctly including solving cold bridging issues around doors and window openings, redecorations, wiring, likely removal and refitting of kitchen and bathroom presses, bathtubs, showers, sinks, etc will be significantly more expensive then insulating a cavity wall. You will want to make sure that the costs involved justify the extra expenditure that it will entail