I've done it several times - in bathrooms and kitchens. Just this week I finished painting over the wallpaper in the master bath. We bought the house three years ago and finally got around to updating the bathroom.
If the paper is already showing signs of peeling, you'll run into problems and removal is required. If that's the case, use a "paper tiger" and DIF solution.
http://www.zinsser.com/projectdetails.asp?projectid=23
Otherwise, if the paper is in good shape and still well adhered, prime with an oil based primer - not latex. If there are small, loose spots, use white glue to glue those areas back down.