Hardwood or softwood for paneling a workshop wall?
I like (and use a lot) softwoods. They are easier to install (nail) and is more forgiving with respect to movement. 

Hardwoods (especially if it’s being milled on site) will tend to split as it dries. You’ll probably have to pre-drill any nailing at the end of each board too. 

However, your biggest problem with either choice is going to be shrinkage. Using green lumber you’ll need to be careful about twisting and shrinkage or it could be unsightly quickly. 

BTW, any wall common to a habitable space requires fire rated gypsum board on the garage side of the wall. Check with your Building Department to see if you need to “rough-tape”.