Finish wall to foundation or to floor?

I'm finishing a dry sunken basement in a 50 y.o. house. The foundation wall is 42" tall (38" below grade) and with 2x4 framing on top. The basement will be used for a rental suite and guest room. The weather here (Vancouver, BC, Canada) is mild (winter averages +3C, summer averages 17C). This house is an old house surround by new houses, so I just want to maintain the house.

Would it be worth it to frame and insulate a new wall from floor to ceiling or is drywalling the existing wall and painting the concrete adequate? Painted concrete doesn't bother me. Function over form, but I'm concerned about heat loss.

Thanks
ken

 

I would recommend framing and insulating a new floor-to-ceiling wall. But it would also be fine to frame only the lower half and provide a nice mid-wall shelf all the way around the room. However, the construction techniques for this are trickier. But, I don't think I'd just paint the lower half. It won't look "finished" and all your electrical outlets would need to be high on the wall, and the electrical openings would provide locations for heat loss.