Radio, we think alike!! I had planned on using pegboard but only AFTER I added the smooth white paneling - I was afraid if I used just pegboard that bugs would get into the holes and never get out plus when you put the hooks in and take them out, some insulation invariably comes with it - I did this in a previous garage.
I had my eye on this plastic pegboard at Lowes - I figured it would be more durable.
It comes in 2x4 panels and I had to trim one end because mine is only 22" tall. I used my circular saw with the fine tooth blade that I used on the paneling and it worked awesome. It actually cut easier than the paneling!!
Here is a pic of the finished out without all of the peg board or the carpeting....
Here is a pic of the storage area with the peg board in place (but not screwed in - I have to get some stand off pieces before I mount it for good!) and with the carpet.
The carpet was rolled up and wouldn't lay flat as it is starting to get cold. Hopefully it will lay down over the next couple of days and I can cut around the emergency brake box. Tomorrow I will get the stand-offs for the peg board and get that permanantly mounted.
Later - time to take the wife out for dinner!