What could be a DIY cover for this insulation ?
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http://houseonashoestring.blogspot.com/2011/09/decorating-unfinished-basement.html
Shiplap to the rescue! Home Talk had many contributors who have successfully used inexpensive wood as shiplap to cover walls. Once it's painted, perhaps a light color, it will both add soundproofing, and make your room less like a basement.
You can use lauan plywood, glue it on with construction adhesive, then paint.
Paint and stencil the floor. Stretch and staple material with upholstery tacks and even cheaper use drop clothes that come in different sizes. With the back being (I am assuming) foam insulation, you could even tack items for display to the walls, such as your craft projects, ideas, etc. Also, you can stretch material (drop cloth may be too heavy) soaked in liquid starch and then stapped or tacked taunt to the walls. The starch gives it a little more stability and ease of cleaning.
The fabric looks really great! Thanks
Sheetrock .. super thin one