I JUST went though this entire job while repainting the inside of our house! I went through a box and a half of 1-1/4" Course Drywall screws. In my home, they nailed in pairs. All I did was put 1 screw inbetween the 2 nails, then I pounded the nails below the 'face' a little. I used a Drywall Dimpler (about $9 at Home Depot) to recess the screws about 1/8" or so. You'll have to spackle up before you paint. By pulling the existing nails out you'll do more damage. There are some 'tricks' to determining how good of a spackling job you did. Get a lamp and hold it about 3' away from your repairs. If you see any 'shadows' on the 'other side' of your work, you need to either do more sanding or add more compound. Sometimes, all you need is a damp sponge to 'smooth out' the minor pits in the mud.
Find a friend that knows how to use a WEB Search Engind, and buy some beer and pizza and have them show you how. Once you get good at THAT, well, you may not need 'us' anymore!!! LOL Anyway, here are a few sites for ya.