Whenever I apply sheathing to closet walls that are to have several shelves, I use 1/2-in. birch plywood for the end walls. The plywood makes it easy to hang a variety of adjustable shelf systems, such as track or peg-type shelf supports, or permanent shelf cleats without worrying about the location of the studs. The plywood-to-gypboard corner can be taped conventionally or caulked with a good grade of siliconized latex caulk.
Wayne Breda, Hope, ME