Why go paneling? Before even considering the cost benefits, consider the other upsides. Have you ever drywalled before? Unless you do it professionally, it is one of those jobs that people delve into and then curse the day the ever dreamed it up. How about wallpaper? Adhesive, measuring, lining things up - not a good time. Panel tiles are easy to work with and fast to boot.
The real thing that attracts people to paneling is of course the price. Paneling is by far the cheapest choice of all the wall repair or renovation options you have. There is a quality loss with paneling that cannot be denied, but you can do a lot to mitigate that if you take the time do it right.
Of course, the quality loss that comes with paneling can't be brushed aside so easily, especially because it is a tangible quality loss. Home inspectors will actually value your home for less when they discover panel tiles in your home, because they are not as sturdy as other kind of wall materials. That means money out of your pocket when you want to sell your home, plus it means scaring a lot of buyers out of the door.
If you're looking for a paneling alternative that isn't as costly or nightmarishly complicated as drywalling, consider tiling. This won't work in every room, of course, but you can tile your entire bathroom wall with inexpensive tiles that will perk it up without installing paneling.
If you already have paneling, or if you want to go with it despite the drawbacks, don't make a shaky situation worse by doing a sloppy job. Make sure your panels look great by taking time with the spacing and hanging. Use paint to jazz them up, keep them clean at all times, and repair any holes or dents immediately by slapping up a new panel. This will mitigate some of the value lost to using panels on your walls. The best solution, however, is to make paneling a short term solution to your problem and planning to address it with drywalling further down the line.