Come on, John2000. I'm sure that you have a game plan and suggestions on this.
Hi, Sharon. First, let me say that I strongly suggest that you take the paneling down, put up drywall, tape and sand the joints, then prime and paint. There are many TV shows on cable that can show you how to do this and, if you keep watching, I'm sure that you can catch one of them. It is a lot easier to show you how to do it than to tell you how to do it. I think I also saw a listing for a web site that had full instructions so you might do a little searching. Your walls will look a lot better.
Whether you start from taped and sanded drywall or you sand your wood paneling with a finishing sander or hand sand with 150 grit, vacuum and tack rag all the dust up. Then put on a coat of Zinsser B-I-N primer-sealer. I suggest that you get your paint at a specialty paint store. You will pay a little more for the paint but the advise you get and the better quality paint makes it worthwhile. The same paint manufacturer will make several different quality levels under the same corporate name, in many cases, and the specialty paint store will carry the top of the line. It's not a bargain if you buy paint and have problems with it. The sanding and the repainting is worth a lot more than the dollars you save buying the cheaper paint. But one other "beware" to this. There have been several reports of problems with "designer" paint that can sell for as much as $65/gal.
If you stick with the wood paneling, you will have to use a brush for the grooves for both the primer-sealer and the paint. If you install drywall, you can use a roller. Others might tell you that you can fill the grooves, but I do not think that this is a good idea. Also, be sure that you have real wood and not just paneling that is a picture of wood on plastic stuck to the front of your paneling.
I'm not sure what you mean by "a hung pegboard ceiling"? Can you explain? And I don't do colors. I have never chosen one that my wife was happy with and I don't care for her choices either.