My last garage was 1/2" OSB on the walls and ceiling. It was great for hanging stuff on the walls. A clock, small speakers, etc. you would just screw them straight in, no anchors needed. Was also very durable.
Then a good friend of mine stained his deck, and ran out for a couple hours with his wife and kids. He opened the door to find a billowing cloud of smoke rolling out. Spontaneous combustion nearly took down his garage, which was also attached to his house. During the cleanup effort, he found outlets that melted out of the box, and a couple of studs that charred halfway through. It was a sweet garage before the disaster, and a tremendous amount of work to restore. The fire chief was very clear that without the sheetrock, he wouldn't have a home remaining!
Learning from his mistake, I am now VERY careful with rags with anything on them, and I have 5/8" sheetrock throughout my new garage. It is mudded, taped, primed and painted with two coats of paint. I am very happy with the way it looks.