spain in january???? insane??

I've spent the last two Christmases in Spain, and had fantastic weather each time. On boxing day last year in Malaga it was 25C.

I understand that the weather will be around 4 degrees in the day

...which would not faze the average Taswegian. But perhaps you live in the north ;-)

Yes, go for Spain, south or east coast. Certainly avoid the north coast where it will almost certainly be raining. It often does during the summer as well. As said above, the central area will be cold.
Have spent many Xmas and new years in Palma de Majorca, usually between 15 and 20 degrees and bright.
With all of this you still have to x your fingers but it's a good bet you'll be OK even if you're not sunbathing.

I suppose that it may depend a bit on where you are coming from. I'm from the central US. and thought that I had gone to heaven in January in Spain. Even Madrid had sunny days between 10 and 12 degrees. The south and Med coast were shirt sleeve stuff. Like the old timer's advice--be prepared for almost anything; but the odds are in your favor.

As others said, in many places of Spain temperatures much higher than 4 degrees in the day (and even the night). Or 4 degrees but nice and sunny. Or, yes, it may be cold. It really depends on where you go. The only I don't like of travelling during Winter are the shorter daylight hours. But this is not that problematic in cities where there is alwuas something to see and do.

and have read that lots of transport etc will close during this period
I would not believe anything else from wherever you read this, as its not true.

Transport (and anything else) in some resorts mainly dedicated to summer tourism may be closed. But 99% of the country are not these resorts! You can imagine the cities and or even the small towns, where people live and work all year round, without public transport just because its winter? No way.

You can have an amazing holiday in Spain in winter. Just plan it well according your interests and according the weather.

Hey

Me and my girlfriend Ailsa live in Melbourne and we'll be in Spain in January too cos she's a school counsellor and that's the only time she has holidays. Checking the average temperatures it looks about the same as winter in Melbourne, with a lot less rain. So we're happy. And we'll also miss the tourist hordes. We'll just make sure we choose hostels with heating. Maybe we'll see you there

Cheers

Binay