If you do a searchon this board, you will see several heated debates on the topic. There isn't a solution that works for everyone. It really comes down to personal preference, the most common are sheetrock or OSB plywood.
Most people would agree that sheetrock will look the best once painted and finished, however alot of people don't think it is durable enough for a working garage.
OSB holds up to abuse better than sheetrock, but shows a texture once painted. You can see the texture before you paint, but it will swell a little once the paint is applied and be more noticeable.
One thing I have seen more people doing here is using galvanized steel for the bottom 4 feet of the wall (like at Chipolte), than sheetrock or OSB for the top. It would be the most expensive option, but it looks real nice and the areas getting the most abuse are covered in steel.
Personally I don't like the texture of painted OSB, so I decided to use 5/8" sheetrock. Honestly, I think you would have to hit the wall real hard to bust through it. I figured I would rather patch the sheetrock occasionally, then look at the painted OSB texture all the time. Only time will tell if I made the right decision. If you do sheetrock, I recommend 1/2" or 5/8", it is heavier and harder to work with, but it will hold up better.