Do you have water or mold problems? I am considering cement board/hardibacker below about 18" and most likely painted 1/2" plywood above.
In my workshop I did 3/8" beadboard panels. They are thick enough that I can hang just about anything by putting a drywall screw where I want. I just put them up with drywall screws and painted them and it looks OK. For a fancy look you could stain or finish them but then you'd have to figure out how to conceal the fasteners. They were about twice what drywall panels cost at Home Depot.