For a House , I would install over OSB or something similar ,( plywood , etc.. , what ever was cheapest ) , for insulation purposes .
We built a 8' x 14' lawn shed the summer of 2010 and I just nailed it straight to the studs . Siliconed each vertical seam before we stuck the next sheet up . In the gabled ends , we siliconed the horizontal seams and then on the corners , We added 4" trim on both sides so the corners were covered . Studs were placed 16" on center . No warping or sagging showing any were .
Granted , It would be easy to hit it with something and break a hole through the wall , But the same can be said for using Dry wall inside a house .
Fred H.