I have an attached 2 car Garage with bedrooms above. There is approx 12" of insul along with firecode blueboard with skimcoat in/on the ceiling. I'm planning to install sheetrock on the outside walls and was wondering if it is worth insulating the exterior walls with 3 1/2" insul first. I'm NOT planning on heating the garage. Would it help in keeping the bedrooms warmer? Thanks for your help.

I would insulate the exterior walls without a questions. Just make sure that if you have a common wall, you don't use poly(vapor barrier). In another word, make sure you don't put poly on both side of the wall.