re: if gypsum board (sheet rock) is so prone to mold, why do we use it?

Building Codes require so much fire resistance and sheet-rock (asbestos was even better) is the cheapest/ best option. Also walls aren't water tight so anything will mold when water sits in dark cool spaces.

I have helped people in Katrina and Bogalusa that wouldn't let us remove the wood paneling in some locations in their homes but that is a terrible idea because the insulation behind the wood and the wood inside the wall will mold this can be very bad for your health, you can't always see it but it's there and growing.