Can you peel off the wallpaper and paint the paneling? If not, you could take the dimensions of the area and have Home Depot precut a piece of beadboard and paint it. Finish it off with some thin moulding around the top. It would look lovely. Thin flexible hammered like tin is also sold that can be used if you like a somewhat country look.

My in-laws installed the peel and stick squares that look like pressed metal. They did it themselves(in their 70's) and it looks very nice. They got it inexpensively at HD or Lowe's. Good luck!

What about a good vinyl wallpaper?

The above ideas are good, too, but if you're up to papering whatever part of the kitchen that would be required to make it look OK, a scrubbable paper would do well in that area. Something classic preferably! If the existing paper is on good, you can paper right over it.

(I've wallpapered and I've tiled...I'm not sure which is the easier job!)