You'll have to look up the actual application, but I would use cultured stone (it has a flat face on the application side.)
I would also recommend having your chimney professionally cleaned first by a reputable company, and have them tell you what kind of shape the flue and liner and body are in before you go to the expense of covering it up, only to find out you really need to tear it apart to rebuild the thing. In addition, the new rock will weigh quite a bit, so it's good to know ahead of time if the chimney will support the weight. (Tell the sweep what you are planning before he does his inspection).
I am making the assumption that you are talking about the outside of the house, since you speak about the chimney, but if its just inside the home, yes, in many cases you can go right over the existing, but you should consider some wire lath that is attached to the existing fireplace with mortar screws.