Any ideas for painting some type of finish on walls that have flaws????

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My walls have variations that would be visible if painted a solid color.....They have a faux finish painted now but paint is peeling....was told that houses in my area built in 50s had a paint used that was chalky, and paint will peel over time...advised to resheetrock??? the whole house? Anyone heard of this? I have had mold in house, but this area supposedly is not due to moisture...But the ceiling in my bedroom is peeling, and now has a two foot wide dark black appearance.....ANY ADVICE???? Opinions appreciated!!
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