I think your second picture looks better. I like stained wood paneling; but in this case, I do see the clash with the floor. Also, the dark blue tile shower seems pretty modern for the stained wood paneling look you are considering. Plus, in this case, with stained wood paneling, I do think there would be too much going on visually. So, imo, paint is your friend.

I'd paint, but the same color as the top of the wall, different sheen. (the wall color is nice, compliments the shower floor tile) too many contrasts clutter up the space.

treat it like trim Satin or semi gloss finish. The shower is your feature. The floor is already dark, lighten up the space.

are those wall boards ACTUALLY real wood? or a composite of some type?

I'd prime it w/a good primer like Kilz.

replace the top railing to something less dated, and paint everything.

Like this ^

If you can trim out the window w/2" wood trim, that would be great too. (see above pic)

If you really want to update, try this and paint it dark to match your tile

updated board and batten, new base molding too.

Thank you, All! The vertical boards are brand new. The home is rustic with a lot of wood already throughout the other rooms. I do think painting is the way to go. I love the trim suggestions!

Terrie, I'd do something like this for the new top railing )obviously you'll patch nail holes, fine sand, prime and paint. in that order!

https://justagirlandherblog.com/install-wainscoting-beadboard/

or, this:

For the window, any of these can work.

for the bottom piece, you can just copy the top piece if you don't want a sill

for my window I got 1x2" oak boards, cut to size, and stained black (obviously you'd paint them whatever color you're choosing)

I chose to do the saddle and sill for plants. might be nice w/your window too.