Panelling a wall in wood is meant to give it an old-fashioned look. But the methods of installation today for wall panelling are very modern, involving electronic studfinders, specially formulated glue, nail guns and tongue-and-groove milling to lock the panels together. Hanging vertical panels tends to be a little quicker and easier than horizontal planks. You should use both nails and glue to ensure a snug installation. Make sure the wall you're going over is solid and undamaged.
Go over the wall with your studfinder and locate each stud in the wall. Mark the locations of the studs with a small mark on the floor, right by the wall, and another on the ceiling (since the wall itself will be covered with panelling).
Measure the height of the wall. Measure your first piece of panelling, from the top to the bottom, and mark it at the wall height, minus one inch. Set your table saw to trim off the bottom of the panelling to make it the same height as the wall (minus one inch). Run the panelling sideways through your table saw to trim off the bottom.
Spread carpenter's glue around the whole back of the panelling. Press into place on the wall at one end, with the top end pressed to the ceiling and the bottom end an inch off the floor.
Put a level on the side edge of the panelling and adjust it until it's straight up and down. (Don't worry if this creates a gap in the corner with the adjacent wall; it will be covered by corner trim.) Use your trim nailer to put nails about every two feet through the panelling along each point where there's a stud behind the panelling (based on your marks at the top and bottom of the wall).
Cut your second piece of panelling to size. Spread carpenter's glue on the back. Lock the tongue-and-groove edge of it into the edge of the first piece you hung. Nail it to the studs. Repeat until you've panelled the whole wall, cutting the final piece lengthwise on your table saw to fit.
Install trim around the floor, the ceiling and the corners to hide all the edges of the panelling.
Wear eye protection when using your table saw.