From http://www.vinylsiding.org/literature/historic.html, the "historic
section" of the Vinyl Siding Institute of America (copied and pasted by
Christopher "Vinyl" Gray):

"9. Allegation: Vinyl siding causes moisture and rot.

Response: Vinyl siding does not cause moisture damage. Moisture from the
inside is caused by inadequate ventilation and should be addressed by a
qualified engineer [more work for Ralph! - CSG]. Insofar as moisture from the
outside is concerned, vinyl siding systems are designed to allow for
ventilation behind the siding and experience has shown that the design is
effective. Weepholes are punched at intervals along the bottom butt edge of
the siding to allow any condensation to drain out. The locks and lap joints
in conjunction with the open ends of the siding, although hidden from view in
J-channel or corner posts, still allow for the dissipation of water vapor
from behind the siding to the outside. If moisture is presently being trapped
in the walls of the structure, obviously the installation of vinyl siding
will not cure the problem. However, it will not make it worse. Painting the
old wood siding is not an answer. In fact, a couple of coats of oil paint
make an excellent vapor barrier. That is why blistering is so often observed
on painted clap board - the moisture is trapped behind the paint. "