I just got a new hot water heater from Sears and it came with (2) nipples that I have never seen before. The nipples are 3/4" and are silver, may be galvenized? They have a blue plastic type of insert in them with one end open and the other end having 2 flappers. They appear to be NPT thread. Also, the cold water inlet has a blue colored something in the inlet.

What are these pieces for? Do I need to install the nipples or can/should I install the supply lines with out these nipples? Can I install the copper sweated male ends that can be gotten at the local home improvement store? Should these special nipples be installed on both the cold supply and hot outlet side of the heater? Do I need to remove the blue thing from the cold water inlet of the new heater?

Thank you for all of your help.