Recommend a material for garage walls

7/16" or 1/2" OSB is a common, fairly inexpensive garage liner in my part of the world. It's consistently flat, and you can opt to show the relatively unmarked rough side (rough to offer traction on roofs, usually has nailing guidelines) or the smooth side, which will have plenty of informational printing but looks better painted. It's nice because you can mount light- and medium-weight objects anywhere on it.

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I usually install with 2" gold screws (do yourself a favor and get star/Torx drive). This makes the job easy and is removable. I tend to show the less-marked rough side which looks nicer if unpainted and hides screw holes better from things I've mounted and removed. (I dislike pegboard and just put screws in the OSB as I need them.)

Caveat: Walls adjoining habitable space must have a rated firewall. You can probably go over any existing drywall, but don't remove it. This may mean extending electrical boxes, but that's not difficult.

Side note: If you paint, don't go white. It looks all spiffy and surgical and whatnot for a year or two, then it's dingy and gross. Use a little creativity and get a medium-toned color.