The ceilings (by the way, what you refer to as "walls" are properly called ceilings in a boat, don't ask me why, and what you might ordinarily think of as the ceiling is referred to as the "overhead") of our boat are stripped with teak battens. But there is a gap between each strip, for ventilation purposes I presume. I'm not sure you'd want to do tight tongue and groove, unless your boat is very well insulated. It seems like you'd want the air to circulate a bit along the hull to help prevent condensation, avoid mildew, etc.
I'll be interested to hear other replies. I would like to do something similar to the overhead in our boat.