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There's no problem with whacking a new layer of plasterboard over the existing. Why aren't you keen? The only downside is you lose 1 cm of space.
Have you considered wood cladding though? Doesn't need to be as 70s as it sounds. Can look really nice and brings some nice warmth to a space. We've got bamboo cladding (actually bamboo flooring) on one wall of our toilet.
I'd say if you really want to put wood on the wall why lose its benefits by painting it.
Crap phone picture but you get the idea.
Fox
I don't think I want that.