I would first clean. I doubt the unsealed drywall will wash. You could try a small area. Your best bet will probably be a broom or maybe a shop/vac to pull off anything loose like dust dirt, etc. Then tape/mud. As for stains and smoke. I would then spot prime any water stains with something like BIN or KILZ, they might bleed through otherwise. Then prime and paint as normal.
I would use a semigloss sheen paint I think. It wont hold or attract the dirt and is more easily cleaned. On the other hand a flat paint will better hide any imperfections in the surface. Hmmm.
My personal preference would be to put up slatwall but that's sick expensive.