Personally, I wouldn't paint over it for several reasons. If you're going to hold this property then a future tenants kid WILL pick a hole in it and peel the whole thing off! So if you want to deal with future issues, then by all means paint your heart out. Never in the bathroom(humidity) or kitchen(grease). That's where all of the money is spent. Don't cut corners it will pay off in the end.
Now if you're going to flip it. Think as if you were going to buy it.
As an investor, I'm going to ask why the wall paper was painted. Then I'm going to wonder what else has been covered up. Mold or smoke/residue damage from an unreported fire/meth lab etc.. If its just one wall I wouldn't worry as much. Things as minor as this draws red flags for me. It will certainly reflect in my offer (pending a thorough inspection). Because down the road I know I'll have to repair it and anything else that I missed.
As a prospective homeowner I may or may not even notice it. The agent probably won't either and you're good. A lot of buyers put too much trust in their agents. You'll have a home warranty in place anyway. And have effectively "kicked the can down the road". It's really whatever your reputation can afford.
As a contractor, I sell craftsmanship and labor (material w/10% mark up) it's no secret. So when a DIY project turns bad or a cover up is discovered, it gets costly. The contractor has to undo what was done, then do it right. My name/reputation is on the line. I hold my subs financially responsible for their work as well. I'm not going to have someone file a complaint over the wall peeling off. I love repeat business! If I had to go back and fix something like that, I would be pi$$ed!!
My mission statement: "Do the right thing the right way the first time"
