Spend the money on a good waterproofing job in the shower and bring the sheet membrane or Hydroban etc a foot or two outside the enclosure. Then tile up to the ceiling in the shower...or at least a fair way above the shower head. There's no need to tile the walls outside the shower. I didn't tile outside my shower enclosure and I have no problems. I dry off in the shower and step out and the walls outside the enclosure are perfectly dry. Tile outside the shower is mostly cosmetic, unless you are doing a complete wet room.

Great thank you Rachel & Jeff for the feedback - this was really helpful!

I would put a nice wall paper in the bathroom matvching the tiles.