I have a bathroom that is tiled halfway up the wall with 50s teal tile and finished with a bullnose. Right now there is only a tub but I am planning to add a shower and would like to tile farther up the wall. Right now there is drywall above the tile. Are there any recommendations on the best way to do this?
To do it well (so you won't regret it later) you will need to strip back to the studs and start with cement-board. More mess now, less trouble later.
In replacing a ~1964 tub which had a tile surround up to "shower height" I found that the whole thing was built on drywall. In that case I was having to rip tile to replace the rusted-out sheet-steel tub, but wanted to minimize offense to the rest of the tiled bathroom - I was able to salvage enough tile to trim around a fiberglass tub surround and maintain the overall look of the bathroom. I cement-boarded behind the surround, in the event that someone might ever want to tile the whole thing. Finding matching tile was not happening, and not all the tiles came off intact.
I recently had to deal with a shower that was tile on drywall ("moisture resistant" - yeah right!) so I'll echo that you'd regret doing this.
But I also have a tub with half-height tile that I want to convert to a full-height shower, and I've seen different ways of doing this. The worst was a vinyl sheet placed above the tile to extend the "waterproofing" upward a few feet; this was a disaster as it's not actually waterproof, looks bad, and will disintegrate the wall over time.
If you're going to go with tile, test whether it's all drywall and replace it with some kind of cement board or tile backer board, then use new tile. My favorite solution and probably the one I'll use - is a tub/shower dressing that's a single piece of fiberglass or something similar; these are molded to have soap dishes and shelves and cover the entire wall down to the tub - some cover the tub also.
It'll probably come down to cost and the aesthetic you're looking for - the fiberglass may need to be custom-sized which would be expensive - but I wouldn't count on keeping your existing tile.