We consider a modulated discrete nonlinear Schrödinger (DNLS) model with alternating on-site potential, having a linear spectrum with two branches separated by a 'forbidden' gap. Nonlinear localized time-periodic solutions with frequencies in the gap and near the gap - discrete gap and out-gap breathers (DGBs and DOGBs) - are investigated. Their linear stability is studied varying the system parameters from the continuous to the anti-continuous limit, and different types of oscillatory and real instabilities are revealed. It is shown, that generally DGBs in infinite modulated DNLS chains with hard (soft) non-linearity do not possess any oscillatory instabilities for breather frequencies in the lower (upper) half of the gap. Regimes of 'exchange of stability' between symmetric and antisymmetric DGBs are observed, where an increased breather mobility is expected. The transformation from DGBs to DOGBs when the breather frequency enters the linear spectrum is studied, and the general bifurcation picture for DOGBs with tails of different wave numbers is described. Close to the anti-continuous limit, the localized linear eigenmodes and their corresponding eigenfrequencies are calculated analytically for several gap/out-gap breather configurations, yielding explicit proof of their linear stability or instability close to this limit.