This can be a relatively straightforward operation if you do it right.
The important thing is to have a good base. While you can cement ceramic wall tiles to sheet rock, I prefer to use cement board as an underlayment. I have seen instances where people will use water-resistant sheet rock in a shower area but I would NEVER do that. It is easy to make a ceramic tile wall that will last virtually forever if you follow a basic procedure. I use 1/2" Durock cement board as an underlayment because it is unaffected by moisture, and you have a lot of that in a bathroom.
The underlayment is probably the most important part of the whole job. It is critical that the underlayment is attached firmly to the wall studs. You want absolutely no movement in this surface because it will cause the grout to fall out and eventually the tiles will work loose. I use cement board screws spaced about every 6" and fasten the cement board tightly to the studs. In a bathroom it is not a bad idea to put up a sheet of plastic underneath the cement board first to act as a vapor barrier.
I use thinset mortar to set the tiles onto the wall, spreading it on with about a 3/16" v-notched trowel. Before you start, attach a straight 1x2 horizontally to the wall as a base to rest the starter row of tiles on while the mortar sets up (otherwise they will slide down the wall). Position this strip of wood slightly more than 1 tile height above the floor; the lowermost row of tiles will be set later after the mortar for the starter row has set. This strip of wood will insure that the row is straight and even horizontally.
When I do a bathroom I use no spacers between the tiles; standard 4 1/4" wall tiles are made with built in ridges on the eges that act as spacers. Cetner the tiles on a wall so the tiles on each end are the same width. Although I have a diamond blade wet saw to cut the tiles, you can get by with a simple snap cutter. Wall tiles are quite soft compared to floor tiles and a snap cutter is fine, or you can even use a glass cutter and score a line and snap the tile the same way you'd cut glass. I prefer the wet saw because it is faster and easier and gives a perfectly straight, clean cut. You can rent these things at a rental place that carries contractors equipment.
spread the thinset mortar on the wall and simple press the tiles into the mortar. After I have a bunch in place I use a flat piece of wood about a foot long to tap against the tiles to set them into the mortar evenly.
Come back the next day and set remove the wood strip at the base and set the lowest row of tiles. After 24 hours you can grout the tile. There are special trowels to help with this. Remember that portland cement is corrosive so try to keep it off your hands; leave it on there too long and it can burn. Work the grout firmly into the joints usiing the trowel held at a 45 dgree angle tothe jointlines to scape it off the wall; this is sort of like shaving your face. After maybe about 15 minutes, take a damp, not wet, but a very slighlt damp wide sponge and wipe as much of the grout reside off the face of the tiles being careful not to gouge it out of the joints. After the reside dries to a haze, use a soft cloth or towel to buff the wall clean.
A critical thing to remember about portland cement is not to let it dry out for at least 3 days, this will make it a lot stronger. Cement that dries out immediately will not develop enough strength. You can do this by misting the wall with water and covering it with plastic. I have been able to get grout as hard as steel by wetting it and keeping it covered for a week. I will spray the joints between the tiles with water a couple of hours after I have set the tiles to keep the thinset from drying out for the same reason.