I have a turn of the century home with the same problem, particularly where the old chimneys are crumbling! My latest remedy seems to be working rather well. I repair the crack one final time, being sure to sand smooth as a last step. I prime the entire wall area with Kiltz (or a product like it). I then apply with adhesive a wallpaper liner. I allow atleast 24-hours to set. As the final step, I apply the latest heavy, heavy duty wallpaper (again with adhesive). This paper is extremely thick,comes either plain or embossed (with designs or a material feel to it). Now I'm ready to paint it and it will last and last! This method is simpler than having to either tear down your existing walls or drywall over them. In addition, it's much less expensive!