More then likely you have to simple rip it down and re-drywall. Its a fairly simple task and if you have desturctive children like i do it can be a family project as well. Just use your common sense and take the proper saftey steps before ripping into it. The most important one that i feel is cut the power to the room. Make sure there are no live wires for outlets, lights, ect. you certainly dont want to cut into a live wire. You should also make sure you pick up some dust masks as well there fairly cheap. Just remember cheap may be good but how much do you love your lungs?
Dry wall is fairly cheap and inexpensive way to really clean up a room. I think the going price by me is 1.99 a sheet ( 4'x 8' )so you can cover a significant amount of square footage per. sheet. The time it takes is fairly quick. Once you get the hang of it you will thank yourself, believe me alittle demo and drywall can do wonders on looks and future repairs aswell. Good luck!