I think it’s mainly a consmetic difference: Drywall is nice and smooth. Plywood not so much. From an environmental standpoint, there are better options for each (green plywood / drywall)… feel free to check out these link below, for plywood and drywall options respectively (and respectfully, for the earth).
Drywall is more fire resistant. The gypsum that makes it has water in its crystalline structure.
Drywall costs less and is easier (and fsster) to finish. Fire resistant drywall is used mainly between the liviing area of a residence and an attached garage. Water resistant drywall is also available.
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