As the father of now 17 year old twins, I suggest 1/4" stainless steel plate. This might be a little expensive, so you will soon learn to buy spackle in the giant economy size. And a quick tip. WD-40 removes crayon from walls and alcohol removes magic marker. Do not allow "Scotch Tape" in the house. It leaves a residue on walls that is impossible to remove.
For your immediate question, there are many, many different panelings. Why not buy prefinished paneling. There are some that come in the colors you would probably paint and some with designs suitable for the kids now and they are pretty cheap and easily removeable as they get older and you want to remove or replace.