Carpeting is probably the worst thing you can put on your walls. It will kill your high-mids and high's, while doing nothing for your low's. So, now you have a really box-y sounding room and bass has gone from being 90% of your problem, to 100% of your problem. Don't do the carpet thing, nothing good will come from it.
Besides that, it's an inferno waiting to happen. And if you do have a fire, and your insurance company sees that you had carpet on your walls, you're screwed.