Wow, your bathroom is in major need of help. What plans do you have for it?

Right off the bat, I'd say you need to replace the walls with greenboard, its a sheetrock designed specifically for spaces like your bathroom where there is excessive moisture.

Next, I'd tile the entire shower from floor to ceiling with new tile. I think mosaic or our Liberty tile would look excellent. You can see here for yourself- http://www.granitetransformations.com/southjersey/products/mosaic-tiles/colors/liberty/

You might want to consider having a plumber update the plumbing in the bathroom while remodeling. It might not be needed, but older plumbing should be updated if it hasn't been in 15-20 years.

Looks like a big job, I hope this helped!