The interior walls of my garage are unfinished drywall. The portion that are the walls of the living space are insulated. The other two walls are not. With a long, cold winter on the way I'd like to insulate those two walls so I can heat the garage and work out there. I'm thinking of pulling down the sheet rock, putting up insulation, and going back over the studs with a layer of plastic sheeting and then pegboard. The layer of plastic will provide a vapor barrier and discourage insects from making homes behind the pegboard. Is there any reason that putting pegboard over studs is a bad idea, or why I'd want to do drywall and then pegboard? I can't think of one but I'm not a builder and might be missing something obvious. Or not-so-obvious.