First, I wouldn't use any gypsum based product in a shower. Now, there is a company that makes a green waterproof board that can handle wet, but I don't think it's available everywhere. Moisture resistant drywall has a moisture resistant surface...the interior is still gypsum, and will suck moisture up like a sponge and often gives problems.
If tiling, it depends...you can't cantelever the tile too far...as long as more than half of it is supported on the wall surface, it can be okay to leave it short. You dont' walk on the wall, and it's unlikely that you'd be applying pressure right above the tub edge, so a little cantelever is okay. What they are leaving out on that diagram that most techniques recommend is a vapor barrier on the studs, lapped over the tiling flange.
What some people do is to cut the studs so when you slide the tub in, the tiling flange is flush with the rest of the stud surface...then, the wall isn't sticking out compared to the rest of the room.