Walls and Ceilings - Replacing walls

My 1955 house has walls with little cracks on most of the walls, mainly near inside corners and the ceiling. I had an FHA home inspector here, and after inspecting the whole house, noted that the structural integrity of the house is fine, and the small cracks appearing in the walls is from the plaster and is to be expected.

After working on some of the rooms, I noticed I had never seen these types of walls before. I looked online, and it looks like in the fifties, they put up sheets of plasterboard with a layer of finishing plaster on top. That's what I have. They're about 7/8" thick (both layers combined). Anyway, I already patched some of the rooms with setting compound and/or tape in the summer, and now it's winter and some of these hairline cracks are returning.

My question: If I removed these plaster walls and replaced with sheets of drywall, I probably wouldn't get any more hairline cracking, correct? Plaster is harder and more prone to cracking, from what I understand.

Plaster can crack pretty much anywhere but drywall can also crack although it is generally limitted to the joints.

Replacing the plaster with drywall is no small undertaking and plaster is usually preferred over drywall. Unless the plaster is really deteriated, I'd try to find and fix the cause of the cracks and keep the plaster.

Setting compound and tape is the wrong repair method. Remove the repair and scrape the surrounding areas until it is only plaster aruond the area. Use plaster to fill the area. If the repair is deeper than 3/8 inch, fill 3/8 and let set, then fill rest until slightly overfilled. Let that set until hard enough to not dent with fingernail and use a wet sponge to level it out. Then trowel the spot with a flat trowel rubbing the area until you cannot see the spot you repaired. The process takes a bit of time to learn but the results are a glass smooth wall that lasts. Mix the plaster to toothpaste consistency with warm water and it sets pretty fast.

Good to know. You can use the plaster for inside corners too? Our bathroom is going to be our summer project. We're going to replace all the fixtures, including the tile on the walls. I was thinking about ripping out the walls too and replacing with drywall, and the appropriate material needed for the shower. Here's why:

-The ceiling has really bad peeling/chipping paint. This was due to the previous owners not having a properly vented bathroom fan. Since then it was repaired and vented outside, and the FHA inspector approved it. Now, we have the mess to cleanup.

-There is a huge crack where the one wall meets the ceiling. I could probably stick my pinky finger in it. After talking with some neighbors and looking at other houses in the area, that seems to be pretty common. There was a small earthquake in this county 5 years ago that did this to a lot of peoples walls. Anyway, with a crack that HUGE, I'm hesitant about trying to patch it up.

Can I place drywall on top of this plasterboard/plaster, or would you rip it all down and just put drywall up?

You can almost always install drywall over a 'finished' wall. You may need to use electrical extension boxes and alter any woodwork - baseboard, casing, etc.

The big gap can be repaired by prefilling it with a setting type compound [maybe plaster?] I would then tape and finish...... but I'm not plaster guy ;)