Forget about the Best and Quickest way! It will make a lousy job look REALLY bad!
First, some unsolicited $.02. You say you don't like paneled walls. Well, I'm sorry to tell you that after you've spackled and painted the walls, they end up looking like, ... well, spackled and painted paneled walls! For the effort it will take to do what you want, it would probably take as long AND look a WHOLE lot better if you simply removed the existing paneling and installed drywall. You could do all the demolition work and drywall installation, and hire a friend/pro to do all the joint compound work. That way, you've got a REALLY professional-looking job. After that, PRIME and paint, THEN hang wallpaper (in that order, and in doing the ENTIRE wall; not just the upper part.)
You see, short cuts will show shotty work. It's bad enough when short cuts are made AND then they're covered up! What ends up happening (like when you go to 'admire' your wallpaper) is that you'll see your mistakes on the UNDERSIDE of your nice, new wallpaper. So, if you want your job to be one that's TRUELY admired for what it is, please take some of my advice to heart. And if it cost a few more $$$ and a bit more time, it will all be $$$ and time that's well spent. Heck, since this may not be the last job you do in the house, buy yourself a few GOOD Home Improvement books from publishers like Time/Life or Reader's Digest or the like. (Christmas is coming ...)
If you want a short-term solution, just clean and paint the walls. Heck, you might like it. I woudn't do the wallpaper and spackling 'thing' unless you like the walls just painted. Here are a few links: Painting Paneling I and Painting Paneling II. They only talk about painting the paneling; not spackling it. For a link on spackeling, see Painting Paneling and Spackling.