There are what I call plaster buttons you can buy to screw any loose spots back in if there is lath. If not and drywall beneath, hey the mess sucks, but drywalls cheap and a quick coat of plaster and a paint match is an easy answer. Keeping with good taste and the originality of your home keep the plaster thin and dont tell! It'll still sound the same for the "knock test". So I say tear the old out and have your self a room you can be proud of, whicch also affords you the oppurtunity to fix any wiring /switch /outlet details you care to attend to.