Unless you just like the appearance of cedar, I recommend putting a commercial non-toxic moth repellent in the closet because it is easier to replace it when spent than to oil the wood every few years (or sooner if it is thin). Not that any of these precautions will do much to prevent holes in your wool clothing.

The thin wood shouldn't be a problem if you install it properly. I paneled an entire vacation house with 1/4" thick T&G pine paneling from Home Depot with no warping. Install it horizontally and nail through the tongues into the studs unless there is sufficient horizontal blocking to install it vertically. I can imagine the difficulty the reviewer had with that simple concept.

The choice between square edge and v-groove is entirely a cosmetic one.

In addition to the paneling clean the clothes, seal them in plastic and use a repellent.

Spanish cedar has the smell naturally, no oiling necessary. You might have to lightly sand(by hand) now and then to keep the odor strong.

Cedar was used because of its moth repelling properties. That is seldom an issue in modern houses.

If, as macv said, you just like the look, it makes little difference what kind of cedar you use. And, since cedar is naturally water repellent, bathroom use is fine.

Spanish cedar should be available at real lumberyards(not home improvement stores). The cost will be more, but the product will be much better.

I always used a 16 gauge finish nailer with stainless steel or galvanized nails to install cedar tongue and groove material. I used T&G to minimize edge curling which will occur in installed cedar planks.

I also usually installed the planks horizontally. Vertical installation required nailers be installed prior to cedar plank installation. That raised the material and labor costs.

If the purpose of the paneling is to repel moths, the best wood to use is "Juniperus virginiana" commonly called Aromatic Cedar, American Red Cedar, Eastern Red Cedar, or Juniper.

Spanish Cedar is not a cedar but part of the mahogany family and has a cedar-like odor. From the always reliable internet: "American red cedar is inferior to Spanish cedar in humidity absorption [for cigar humidors] and it exudes a more intense aroma."

Aromatic Cedar find a supplier

Here is a link that might be useful: cedar closet paneling

Thank you for the information. I am still undecided about lining the bathroom closet with cedar. I appreciate the advice about installation as well.

I had cedar planking installed in a closet it does not fell smooth to the touch were joined why ?