Installing a 2″ rigid foam layer to the outside of the foundation will give your wall an additional R= 13. This will slow down the rate of heat loss from the concrete to the ground or the air. However, the house has to be designed to accomodate this additional thickness. The sills must hang out over the edge of the foundation wall by 2 inches to give the foam a flush surface under your sill.
Warning: If you install the 2 inch rigid foam only up to the grade line, then bury the top, then the exposed area of foundation wall will be colder than the sub-grade section, possibly causing cracks in the wall due to uneven expansion and contraction.
There are concrete forms called ICF Blocks that come with the insulation on both sides and the steel reinforcing built in. It’s a great idea. Just remember that a full two story home requires the structural strength of 10 inches of concrete, not 8 inches.
Exposed foam above grade has to be finished somehow. It is just soft foam which breaks down easily in the sunlight and is easily damaged by cats and dogs and bugs. Some suggest a stucco application with highly water resistant mortar. Some might use the same mortar to fasten a simulation stone veneer to the foam. In both cases, metal fasteners should be embedded in the concrete to grip the facing because nothing can stick directly to foam for a long time.
Here are some links to show you what ICFs look like and how they work.
http://www.owenscorning.com/foldform/