Foundation walls are usually made of poured concrete or stacked concrete blocks—not the most attractive surfaces. Fortunately, you can cover basement foundation walls quickly and inexpensively. Attach wood furring strips, Z-shape channels, or 2x4 studs to flat, dry masonry walls, then add insulation and cover the strips or studs with drywall. Such treatments give walls a smooth, even surface that accepts finish materials such as paint, wallpaper, or paneling. This type of wall system makes it easy to install electrical wiring, television cable, speaker wire, and telephone lines.
If basement walls are bowed or out-of-plum, build a stud wall in front of them to ensure a flat, plumb, finished wall surface. In this case, the stud wall is not attached to the masonry wall. Just like a partition wall, the top plate is attached to overhead joists and the bottom plate is nailed to the concrete slab.
To make your basement more energy-efficient, fill the spaces between the furring strips with rigid insulation. Or fill spaces between 2x4 studs with fiberglass batt insulation. In cold climates, you may want to include a vapor barrier during the insulation process. The vapor barrier, typically either separate plastic sheeting or treated paper attached to one side of the fiberglass batt, is designed to prevent warm air from condensing inside the cooler insulation. You should not install a vapor barrier in warmer climates because moisture moves both into and out of the house for significant portions of the year.