you can do it on drywall, but if there is going to be any moisture its best to replace the drywall with backerboard. hardibacker is your best bet. can be had at lowes or home depot for $10 for a 5' x3' sheet. use mastic wall tile adhesive. comes in a bucket, and just use a trowel to put it on. make sure you get a trowel with the correct notch depth.if you have any other questions feel free to ask.
depending on how much tile is gonna be hangin on the wall too is how you can determine if you need to put backerboard up. you need a sturdy wall to hold weight, and backerboard is no where near as flimsy as drywall.