Chimneys in older houses can be a real source of draughts. Whilst a good bit of air circulation is required in older homes you can get too much of a good thing!
In the past there has been little choice with blocking up chimneys, but a small company up in Cumbria has developed a great alternative to the chimney balloon. The Chimney Sheep (TM), see http://www.chimneysheep.co.uk
I have used both and I can say that I prefer the sheep as my balloon keeps on slowly deflating and falling out of the flue. The ‘sheep’ has stayed in place. The sheep is a felt made from Hardwick wool and so has a lot of ‘sustainability’ advantages over the balloon. It is a natural product (although the handle is plastic) and hence it is breathable, it is also easy to wash and to store when not in use.
So if you are looking to reduce draughts when the stove / fire is not in use then it is a good option to look at.
I would always recommend that you have a cowl on your chimney to reduce water infiltration from above as any draught excluder doing its job will reduce airflow and hence you will need to ensure that the chimney is kept as dry as possible from above. Always remember to remove the draught excluder when using the fire and also during the summer months as this will promote good air flow in the home (which can help with damp issues and internal air quality).