exhaust wrap is an insulating fabric that you litterally wrap the exhaust piping with. from cylinder head to slip-on... the idea is that if you keep the heat of the exhaust gases IN the exhaust system, they'll race through the system quicker -> more power.
i think exhaust wrap's a fairly easy/cheap mod but it gets ugly pretty quickly if you ever get caught in the rain. ceramic-coating the exhaust will yield similary (if not better) results and is easier to maintain/clean. planning on pulling my headers this winter to send 'em off.
Due to the "ugly" factor, I'd recommend ceramic coating. I had my headers done by High Performance Coatings in Chandler, AZ (they also have a facility somewhere in the midwest--check their web site). The cost was very reasonable (under $200 which includes clean-up) and they coat inside and out in a variety of colors. They look fantastic and seem to keep things cooler. . . a great inexpensive mod.
I bet that exhaust wrap look just as bad as carbon fiber after a while. Both of them I'm sure look like hammered s#$t after being in the rain, sun, or in the wraps case-the intense heat of the exhaust gases. I had just a wee bit bit of CF on my 750 and it came off almost as quickly as my girl's clothes when I brought the bike home.