First off I would not use vinyl siding as from what I have seen it is not the cure all that some are saying it is. I have seen it fading and chalking and it does get brittle and wind will blow it off the house.
I would go with one of the concrete sidings such as Hardi Plank or CemPlank. If you apply an acrylic primer and a acrylic semi-gloss house paint to these products you will easily get 6 to 8 years or more out of the paint job.
If you do go with the vinyl you don't want to apply it over rotted wood as the rotting will continue under the siding and really give you problems.
Remember when they came out with aluminum siding and they said you will never have to paint again. Well guess what you do.