Sapwood's points about plywood are good. You will always need to add, change, etc, and it's nice to just drive a nail to hang something up. I haven't checked sheetrock lately, but prices may be through the roof, so I hear. Plywood or OSB may be cheaper options now. I lucked up on my shop and got 3 truck loads of free 4'x8' tempered hardboard (masonite). My walls are concrete block, so I put up 1/2" foam insualtion board, topped it with the masonite, then put up 1/2" x 1 1/2" strips 2' O.C. vertically, then run tapcon screws through the strips through everything into the block. Did the ceilings similarly except used regular insulation then air stapled the hardboard to the joists, then stripped it out. The shop was empty, so I was able to shoot the paint with a spray gun. Shot the whole thing with cheap primer first, then got antique white gloss enamel and shot it. I think the final paint covered in one coat. The gloss enamel is good because sawdust doesn't stick to it as much, and it's easier to clean. That's my 2 cents.
