Either would work fine. I personally would go all in. But I don’t mind a little bit of bold. Especially in a bathroom.
Another option is to do all the walls but just the top half. And the bottom with beadboard/ molding.

I would do the entire thing in wallpaper. In my opinion the less number of finishes there are the better. Wallpaper is one finish. Paint is one finish. Why add Two more finishes to a small room, add one more, one or the other.

For a small space, definitely all the walls in the bathroom.

Thanks for the input. Totally forgot to mention that there would be picture frame molding on the bottom half 🤦🏼‍♀️ so sounds like all wallpaper on top is the way to go.