Drywall compound by itself might not be the best solution since its not really a great gap filler; it requires a backing to adhere to which is why you use either paper or fiberglass tape when putting up drywall.
As tester101 suggested, you could use crown molding or quarter round to cover it up.
I would imagine that filling it with mortar might give the most natural looking results since mortar is already used and it would blend well with the overall appearance.
Alternatively, I think you could fill this with a paintable caulking or spray foam - it really depends on the results you are going for. With caulking you are still likely to see the gap - it will just be filled with a different material now.