I'll defer to Steves knowledge on this, but Weve done several of these kinds of projects. We use furring strips every 16" with styrofoam board inbetween for insulation. There are eletrical boxes made for this purpose that will fit in the smaller profile of these walls. If your concerned about the dampness of a basement then use Moisture Resistant (MR Type) drywall.
I assume that you intend to finish the drywall yourself. One tip for you, apply the mud in thin layers, with at least 3 coats on all seams and nail or screw heads.
When it comes time to do your painting, don't cheap out on the materials.; I recomend Benjamin Moore, Zinnzer or Brunning products. It's better to spend the extra on your paint the first time than to have to do it over in a couple of years.