I have high density foam insulation panels covered in white felt and attached to the wall. Mine is 8 feet square, but you could make it any size. The insulation panels are inexpensive, very lightweight so easy to attach to the wall without much damage, and easy to cut to size. I just used a hot glue gun to attach the white felt. Another option would be to cover with a flat flannel sheet.
Someday I would love to frame the design wall with wood trim to make it a more finished look, but for now it's functional.
RST