Basswood is a decent, ok wood for this purpose. Birch is probably a bit better, in that it's harder. (Basswood tends to be a little fuzzy - great if you're going to paint it, but not so great if you aren't.)
My personal favorite material for deck planking (speaking as a sailing ship fan), though, is holly veneer. Holly is wonderful stuff - extremely hard, with a beautiful, fine grain that, with a little help from stain, actually looks like miniaturized wood. Terrific stuff. It's kind of hard to find; here's a source: www.constantines.com.
The big advantage to basswood, of course, is that you can buy it already milled in strips. (The smallest size carried by most dealers is 1/32" x 1/32"; if you've got a local hobby shop that caters to model railroaders, you may be able to find some slightly smaller sizes in HO "scale lumber.") Veneer (either birch or holly) is considerably cheaper, but you have to cut the strips yourself. I don't recommend trying to do it with a knife; it's next to impossible to get straight edges and uniform widths that way. But if you have access to a miniature table saw, you can rip out enough deck planks for the model - in whatever width you want - in about half an hour.
My favorite adhesive for attaching wood planks to plastic parts is old-fashioned tube-type plastic cement. (The last time I did it, I used good ol' no-longer-available Revell "Type S," but I imagine Testor's would work ok.) The principle is that the cement softens the plastic and soaks into the wood. The model in my avatar has styrene hull planking cemented to a carved basswood hull, and has held up perfectly well for about 25 years.
Two other small tips. One - before you lay each plank, run a fairly hard pencil around all four edges of it. That will produce a fine, dark grey line around each plank, and the line will survive any scraping or sanding. Two - when you've finished laying and staining the deck (I recommend "Driftwood" color stain, from Olympic), give it a thin coat of white shellac, dilluted almost beyond recognition with denatured alcohol. The shellac will, to all intents and purposes, be invisible; if you dillute it properly it won't add any gloss. It will, however, make the wood impervious to any paint that inadvertently gets splashed on it, and resistant to other brutal accidents that may befall it before the model's finished.
Hope that helps a little. Good luck.