Is it worth having walls covered in acoustic foam panels and bass traps in corners? If you are just playing guitar and playing the recordings of the guitar back, would the improvements if any, be big enough to justify acoustic panels etc?
Its a subjective question. Besides the recording studio in my house, my living room & bedroom are treated. Mainly because i want my sounds to transfer to my own studio or other studios I might record in. Many people do not enjoy a treated room. It can sound to some very sterile. An untreated room will have plenty of reflections just like some auditoriums and other venues you play live. Of course if you have an acoustic issue it might be worthwhile to treat only that specific condition.
is it a night and day difference?
It can be, but since you are not listing numerous complains about your room then probably no.
I watched a video where it said if you clap your hands and hear the clap echo that tells you how much treatment you hear...
A hand clap mainly gives you an idea of the Reverb Time (RT) for the room. Also a hand clap contains more than one frequency but it is still limited. It will not give you a good measurement of low or high freqs. Plus there are a number of acoustic issues a hand clap will not indicate. When I used to work live sound one of the first things I would do at a venue is clap my hands and yell. It gave a very basic idea although I had to account with it filling up with people that will greatly effect acoustics.
I have a couch and carpet on the floor, and paintings/posters/art sculptures covering most of my walls, I don't know if that stuff helps any, but I don't hear an echo when I clap my rooms. So based on that, if that's true, seems like it wouldn't do me much good. Maybe I just answered my own question? You tell me.
Everything in a room effects the acoustics. Some positive, some negative. A couch & carpet (and the padding beneath) can be good absorb some frequencies. Art work depends. If they have glass in front, the glass will tend to reflect higher frequencies back into the room. But other frequencies will pass thru. What happens then is decided by what is behind the glass. Often low frequencies will pass thru and get absorbed acting like a bass trap though not as good as rockwill or real traps.
When you see a glass window in a studio, it has two or three panes separated by air. Sound energy is used up transferring thru the glass and air.
If you are not recording in the room or worrying about your sounds transferring exactly, then it really comes down to whether you like the sound in the room. We all tweak our presets to our own rooms whether they are treated or not.
There are free or cheap things you can do that improve room acoustics. Add some pillows, especially in room corners. They will absorb low freqs. I have stacks of those cheap thick mexican blankets (been to Tijuana a few times!) which you can find at thrift stores or flea markets too. Folded up they can also absorb low freqs. When I record at remote locations I throw them all over reflective surfaces to cut down on mids-to-highs. You can hang them on walls, throw over reflective furniture, etc. I have one that hangs over my studio door and in my bedroom over the big mirror. Another thing I have is sheetrock wrapped in a blanket that I use to isolate (for spill) a guitar amp/cab, drums or even things like AC, generators & other things. No. None is perfect and you have to be careful not to ruin a room. Still it can be a low-cost solution and I and many others have used it on major recording projects.