I had panelling in my living room also. I first primed and painted it. I liked the look for a while, but still didn't like the panelling "look". So I textured the wall with joint compound. I used a large putty knife and smeared it on in a light monterey finish. You have to fill in the grooves first and then finish it. I then painted it. Looks sooooo much better. Let me know if you have further questions.