need opinion of what to do on the wall above shower unit

I was hoping i could get some ideas on what to do with the area that is now "painted wall" above the shower unit.
My house is only 5 years old, i have a shower stall that is situated in the corner of the master bathroom. I think that where it is situated is posing a problem. The steam from the shower forms water droplets, they run down the wall and mold dots appear on the wall in this "corner." So the water droplets run down the wall and sit on top of the lip of the shower stall. Now this area from the water is ruining the wall since the paint is starting to peel and wall get soft. I'm thinking my only option is to rip out the shower unit and tile it all but i was hoping there was something else.
thanks

Millions of bathrooms all over the country have shower walls that go up to about 70" above the floor, and painted drywall above that. It does not need to be a problem:
> you must keep all seams caulked
> keep a coat of good semigloss or gloss enamel on the wall
> VENTILATE . You should not have so much steam from the shower that a lot of condensate forms. If you do, you do not have enough ventilation from the shower and you will have mold issues. Get a lo-sone fan with minimum 110 CFM

I am just a homeowner with a little repair experience but here are my thoughts. I also live with walls that go 3/4 up and then are painted.
- As you mentioned, if the shower stall is tiled - tile up to the ceiling. I don't think it would look good if you had a plastic shower wall and then tile.
- If you have a exhaust fan - maybe upgrade it to a in-line fan and add an exhaust above the shower itself. They have some with lights in them, might look OK.
- In another house, I have painted the walls with oil based paint and primer. My thoughts were the oil based paint may form a better barrier against the water (oil and water don't mix) and will hold up better. I have cleaned old latex paint off of things by just soaking it in water, I don't think it would be the same with oil based paint.
- I have even wall papered the bathroom as well - not a fun job.
My opinion is try the exhaust fan if you have access along with the oil based paint if need be. I would imagine having air flow past the steam will dry it up rather quickly

In short I would tear that plastic outta there, but I am crazy about tile. Otherwise paint it, ventilate it, and use a colored silicone caulk to match. Done I also do allot of shower rebuilds where I will run the new tile to the lid and I think it looks great.