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Yes, many types of peel-and-stick wallpaper can be used in bathrooms, especially those made of vinyl or polyester. However, its success depends heavily on the level of moisture and ventilation. In bathrooms with good ventilation, such as those with fans, it can be a durable option. Peel-and-stick wallpaper may not adhere as well as traditional wallpaper in very humid conditions. For bathrooms that see a lot of moisture, like a kids' bathroom or a full bath with a steamy shower and poor ventilation, even high-quality peel-and-stick wallpaper is likely to peel over time.

Textured or patterned vinyl wallpaper designs are the best option for hiding imperfections. Embossed designs or faux finishes like brick, wood, or linen textures are especially effective at camouflaging dents, cracks, or uneven surfaces. Avoid smooth, shiny finishes, as they can highlight flaws rather than conceal them. 

The pros of wallpaper include its durability and longer lifespan than paint, as well as its versatility. The durability can translate to lower long-term costs for upkeep and replacement, and the versatility means you have more options for customizing rooms in your home. Some downsides include that it’s difficult to remove, it’s not ideal for rooms or areas exposed to high moisture content or sun exposure, and it’s tricky to install. A professional wallpaper hanger can help mitigate these issues, though, by installing it properly and in areas suitable for wallpaper.

Common mistakes when finishing basement walls include neglecting proper insulation, insufficient moisture management, and poor ventilation. Not addressing these issues can lead to mold growth, water damage, and discomfort. Additionally, inadequate planning, improper framing, and rushing the project can result in subpar outcomes. 

It's essential to follow best practices, seek professional guidance if needed, and prioritize thoroughness and attention to detail.