I would go with osb or something similar as well. When that drywall gets wet it's toast. Also, if you have a problem with oil or something it won't be so obvious or destructive. The only problem is fire protection. Drywall will help retard heat and flame, but osb or plywwood obviously won't. The laminate will bake right out of the wood and get super hot.
I've seen plenty of shops with holes in the drywall. I also remember when my dad accidentally ruptured a hydrolic line on his tractor in his shop by mistake. There was hydrolic fluid everywhere (it's a 30' x 30' shop, and there was fluid on the opposite side of the room on the phone!). That stuff would make short work of drywall, but on wood it just coats and dissapears over time. You can also just take a skill saw and cut a section out and replace it without farting around with a sheet of drywall, rasping, mudding, etc.
Another thing you might want to think about is setting up an exhaust fan system with a pipe that runs outside the building near the peak or something. Maybe a couple of horses in an electric motor with a 6" vent pipe to pull fumes out of your garage. That's something I wish my dad had done. That garage can really fill up with fumes when I'm rebuilding a carburetor or something. Also, you can't smoke a cigar without turning the shop into a fog bank.
