I have a brick veneer house built possibly in the '60s with all the interior
walls being timber frame. I want to replace the walls of the bathroom with
an appropriate material but don't don't really know what my options are.
Budget is a factor. Any suggestions greatly appreciated.
Mike

Tile in wet areas and drywall in dry areas, then paint or wall paper.

What do you mean by "replace the walls"?
What are you calling "timberframe"?
Can you post a picture on the web or be more detailed in the
description of the problem and what you want to acomplish?