Personally I think its madness for anyone to put airlines inside a wall, unless its a massive distribution system with a large number of taps on all walls. Reason: you are locked, forevermore into that layout without ripping out drywall and insulation, inside a filled shop. Needs can change over time, and so must the layout. A surface mounted setup is obviously easier to change. Also, if I decide to move, I am not leaving a pile of expensive copper pipe behind. Its going with me to my next shop so I don't have to fork out the cash twice.
If I failed to convince you, and you are set on internal, the problem with black iron pipe is that its dirty and can get on the finished drywall as you detail the system (remove caps, and install hose reels, FR units, etc after the drywall is hung), the problem with copper is a hot torch next to finished wall. Both are possible to overcome but its also good to be thinking of as many end-details you can put in place before the drywall is hung. I would put a ball valve on each tap because I haven't met a QC yet that doesn't leak slowly over time.
1/2" dia is probably good enough for most needs. 3/4" if you intend on servicing medium duty trucks or running something like a blast cabinet faraway from the compressor.