Painted paneling can work if you prep it carefully, but if you add a lot of shelving for your craft supplies, you may find that you don't notice the paneling as much.

I would absolutely paint the panelling white.or driftwood grey it will give the space a new feel. Cubbies are essential for a craft room. I also love the idea of a large farm table with huge drawers that can be opened on each side. Place it perpendicular to the wall and be able to work at it on both sides with stools for easy access

Thanks. I think the grey sounds awesome