Patrick, I used an exterior panel in our dogroom that goes up just like T111 with the rabbeted edges, but has a primed surface that's ready for painting.
http://www.starbornhavanese.com/images/DSCN5733.JPG
Here is the link for it. It's not as cheap as sheetrock, but you would have to try really hard to knock a hole through it, and it does take a lot less time and mess putting it up through finish painting. I hand nailed it with 6 CC sinkers, hit the nailheads with oilbased primer so they wouldn't bleed through, and sprayed it the same day. No sanding of any kind. I wanted to be able to find the studs easily without bothering with a stud finder, and you have to look for the sinker heads in the wall texture.
http://www.homedepot.com/p/SmartSide...7874/100055901
I also used it in closets in the latest addition on our house.