All of our coops have been that plywood siding with the grooves cut in. It works very well and we have had no problems with it. However, we are getting ready to build a new coop and we will be using the 1 x 6 fence boards. I am going to put them up on the inside of the coop as well, so we have solid walls that will be easier to clean. By doing interior and exterior walls, It will also allow me to add some insulation and the chickens won't be able to get at it. Plus I like the way they look!
Since my husband does our construction work and he isn't that experienced, I thought this would be easier for him. He gets very frustrated using those 4' x 8' sheets of plywood siding and having to cut out windows and doors and so forth. By using the fence boards, I am hoping he can frame everything out and then add the boards one by one and that way it will be easier to cut and fit them onto the coop. That's my plan anyway.