Basic ideas:
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Generally, not a great deal of attention is needed on the walls.
  Games tend to cover up most of the wall space!
  Simple color scheme. Generally darker colors... blue, dark gray.

Potential exists for wall art
  Use flourescent paint to stencil on artistic designs

Consider a wall mural to add to the theme.
  A wall mural is a painting on vinyl backing that is applied an entire wall.
  Most prices for the common murals on eBay approach wholesale levels!

Forget paint -- wall-to-wall carpet?!

Mirrored walls
  An entire wall or just an area.
  Use small square or rectangular mirrors as tiles?
  Creates an illusion of more space.
  Definately in theme for an arcade.fs

Consider an overall theme for the arcade.
  Often Sci-Fi. Inside of a space ship, for example.
  Basic primary colors and geometric shapes.

Custom or themed wall borders can add a nice touch.
  [image of Star Wars banner along the top of the wall]

Posters
  Actual arcade and arcade game posters.
  Sci-fi posters.

Wall Scrolls
  Scrolls that unroll and become color wall posters printed on cloth.
  From Japan. Available for many anime series (some with good sci-fi scenes).
  Example: http://www.toysnjoys.com/wallscroll_g.html

Paintings on the walls.
  Some arcades I remember had spacey wallpaper.  Of course the designs were
  influenced by the artists of the time.  And most of them had elements of
  design only used in the late 60's through the beginning of the 80's.
  using popular fonts from the 70's to spell out words like zap or kablam
  or waka waka can act as a subtle but interesting background.  Make sure
  you align the words at an angle though.  This gives good movement.  Also
  use different colors for each word but not different colors within the
  same word. -- Snak Machine (sumbugs@earthlink.net) (April, 2000, RGVAC)