The least expensive would be to paint it if you can get the sheen to take paint.

Budget friendly, if the paneling is in good shape, I would keep as is.

After you rip up the carpet and put down flooring, I can see this room with black leather sofa and MCM decor tables and area rug.

Some inspiration:

Carmel Mid-Century LEED · More Info

I would paint over some of the paneling. Who knows what's behind it... I would not attempt.

KILZ is a great high adhesive primer. the new flooring and paint will set the stage for your furniture. have fun!

Modern isn't this paneling that’s been painted. With the laminate flooring, you’ll end up with an odd faux look. The laminate doesn't need to compete with the paneling. You’ll probably need drywall but that’s a big step forward in evolving this into a room you want to spend time in.

I would paint the paneling but that's just because I'm cheap! It doesn't look good - I would not leave even one wall like this. If it's in the budget, drywall this baby!!!!

If you choose to drywall, rip out the paneling. I would not put the drywall over it.