I just went through this exact same thing. The previous owner wallpapered, and not very well, over wallpaper and painted it.
My wife wanted me to just paint again, but I knew that would just make matters worse.
I used a steamer to get the wallpaper off. Then stripping solution to get the hard to get paper off.
The plaster walls were pretty bad. I filled the small holes and cracks with spackle. For the large holes I patched with joint compound. I also used my shop vac to vacuum the loose plaster out of the holes, and surrounding area. This made the holes bigger in some places, but at least it won't crumble. By the time I finished the wall looked like I had spackled the whole walls. I used a coat of primer, and 2 coats of Latex paint. Looks 1,000 times better than before. Take your time and do it right.