I've put down a lot of three-tab shingles in the past, but the cost difference between 25 year three-tabs and 30 year architectural shingles is so small anymore it makes no sense to go cheap. Architectural shingles are the way to go, and look 1000 percent better, especially on any roof with very much pitch.
It's good that your insurance agent says he'll cut your rates by 200 bucks a year, but how long is that promise good for? If it costs you a thousand bucks to go with 50 year roofing, and the company jacks your rates back up after one year, you just ate 800 bucks. I'm not saying that 50 year shingles are a bad deal, but don't figure in the insurance savings after the first year. Even with 30 year shingles, chances are the next roofing job is going to be somebody else's problem. The higher-rated shingles typically look a little better than the cheaper ones, but not enough to justify a big expense. As for steel, well there are some very nice steel roofing systems, but not everybody wants a steel roof.
For underlayment, you need "ice dam" rubber underlayment along the eaves. You can cover your whole roof with the stuff, but it's a waste of money. Regular 15 lb roofing felt will do just fine. If the sheathing is in poor shape, put layer of 7/16" OSB over the old sheathing. The extra thickness will hold nails much better.