If you plan on painting it anyway, I would sure go for the plywood. 1/2" or thicker - be sure to caulk/seal all joints and corners.
The groove style is up to you - keep in mind that "T1-11" is a style of finish, and does not assure quality of material. I only use all wood premium grade. It is very possible to get "T1-11" in OSB, Hardboard surfaced, etc.
HTH
That's good to know - I didn't realize that it was just a style, not a type of board. I will look for it. I called pretty much every lumber vendor in town and no luck with the boards. The closest was our hot tub dealer, who wanted 300 for an old panel that is a year old. I love the guys at WindRiver, but I'm not paying 300 bucks when I can redo the whole thing myself for half the cost.
As far as caulking, my current skirt screws into the base pieces of wood. Are you saying I could caulk around the edges after I screw it in, or that I should caulk any joints I have in the middle, or both? My only concern with that is I probably get into the tub every 3-6 months for something or other - maybe I'll design an access panel with gaskets or something. My tub is fairly old (7 years) so I sporradically get leaky gaskets, etc that I have to fix.