Texture is better than smooth walls and acoustic panels are better than texture when it comes to acoustics. As stated, use a flat or eggshell paint for best acoustic results (and hardest cleaning).
If it were my room I'd make a few panels out of Owens Corning Fiberglass 1" thick insulation boards with louon (sp?) backing and wrap them with burlap of your favorite color. That would cover most of the surfaces and paint the rest semi-gloss so it will clean easily.
It sounds worse than it really is. If you want to look into it more, just send me a PM, I can get you pointed in the right direction. You could even order the panels from one of several companies to save time and spend extra money. You would be looking at maybe $300 in materils to DIY (haven't checked material prices in awhile, could be in for a shock).
The panels would be easier and cheaper than smoothing out the walls. If you try to just smooth them out be adding mud (assuming you have less than a few years experience taping/mudding) it won't look very good when you are done. No offense, just been there, done that, then had a professional redo that.