Flooring Tile - Bathrooms

I am doing a bathroom as well, and intend to use 4 inch square tile, with something like a 2 inch by 4 inch tile border around the outside. I am considering using a wainscotting tile type set up on new drywall as well, going about 4 ft up the wall. Is this possible? And if so do I just grout between the floor and wall joint or do I need to use some type of seperator? It seems to me when I picture it that that would seem kinda steril...like a public bath, I dont really want that, but as it is a bathroom I dont want to lay in something that is going to absorb moisture. Anyone have ideas on this plan?

Sounds like a good plan,i would use green board and not regular drywall though,and at the joint at the floor and wall intersection you would need to caulk that joint as it would crack and be unsightly:cool: