Finishing garage interior

[ronh72c10]

Hi all, I've got a 30x40 shop that I'm going to insulate and finish so I can work out there comfortably during the winter. I've got an air tight wood stove to heat the place.

Couple of questions:

Is it worth going with 2x6 framing and thicker R20(?) insulation or would 2x4 and the thinner R12(?) insulation be good enough? The price difference in insulation is basically double.

Also what would be a good interior sheeting to use, seems to me that drywall is going to be more fire proof from things like welding sparks and grinding, but plywood would be alot more durable.

If it matters it's an old post and beam machine shed so there's alot of exposed dry wood beams, any fire prevention advice would be appreciated.

Ron