When we were getting our old house ready to sell, we too had an entirely paneled basement...that was the interior walls...no sheet rock behind it. So we painted the paneling and the ceiling and dressed up the moulding. It made a world of difference. We also added new carpet...an olefin level loop (think commercial grade). What a difference...we picked light colors...pale blue in one room and a creamy beige in the other. Used white trim on the moulding.

When we bought our house, part of the walk-out basement had that same paneling, but ours was painted. We ended up tearing it out and putting up drywall over the cinder block. It has made a huge difference in how the space feels. Even painted, the paneling felt 70s and rather cheesy. Now, it looks finished and much nicer. If only it had been cherry or walnut paneling...

This is a real wood paneling transformation, but think it is worth looking at:

Here is a link that might be useful: young house love

I can't really tell from your post, but is your paneling the 70's-ish thin (1/4" or so), smooth type or a more substantial (3/8"-1/2") type? My parents have the thinner, smooth type in their den that was pretty much a lower budget option back then, while our basement has a thicker paneling with a raised grain, which was a little more upscale back in the day.

In my case, in thinking about re-doing our paneling (because its a dark shade), I thought I would just paint it in a lighter color because it is a rather substantial paneling and looks pretty good. If it was the thinner, smoother type I believe I would just remove it, mainly because I don't think it would take paint well, but I could be wrong about that.

One last thing: if humidity is an issue at all in a basement, I would be very hesitant about converting to drywall. Drywall in a higher humidity environment can lead to problems, especially mold and/or mildew related problems which can become an expensive thing to fix, not to mention any health related issues.

Just my 2 cents worth.

Thanks all.
The room isn't used enough to bother with drywall, which is why I'm considering paint.
It is the cheap smooth stuff from way back and no doubt will never look perfect.
I'm just trying to get more light into the room.

The example you posted, olychick, was perfect. Great inspiration!

I've seen some knotty pine that can look good in a basement with berber carpeting to keep it more rustic, but if yours is not real wood, I would paint it. Out kitchen knotty pine had been previously painted, so we painted it white and really like it. Good luck! It will make a huge difference.

Thanks all.
The room isn't used enough to bother with drywall, which is why I'm considering paint.
It is the cheap smooth stuff from way back and no doubt will never look perfect.
I'm just trying to get more light into the room.

The example you posted, olychick, was perfect. Great inspiration!

I would paint it in a heartbeat. Painted paneling can look great if done right.

Make sure your use a good primer - most of that old paneling had a slick, almost plastic feel to it and paint will definitely peel if not primed properly.

We painted our basement paneling several years ago and it still looks fine. It is the cheap 70's type, and we did prime first then painted a cream color. It has held up great. I'd prefer the look of drywall, but like you we don't use the room enough to justify that cost and all that labor, since DH would be doing it himself if it got done.