If your plaster walls are in good condition, you can fix cracks and holes using patching plaster. But if you've got walls or ceilings that are sagging and have big holes, you've got a big job ahead of you.
Older houses have plaster walls and ceilings with wood lath for a base. These thin strips of wood were installed on the wall framing with gaps between them, which the original plaster then filled, creating "keys" that hold the plaster in place. Unfortunately, as plaster ages, as leaks occur, and as the house shifts, the plaster sags.
It's easy to find sags. You can confirm your diagnosis by pressing against suspect areas with the flat of your hand. If the plaster feels spongy or "gives," you've lost your keys. And that's a problem: If a sagging area is not repaired, it can suddenly let go, with a huge potential for damage and personal injury. Don't wait for this to happen.
If the sagging is severe (more than 1 inch away from the lath), or if the sag covers a large area, the best solution is to pull down the old plaster and replaster, or cover it with drywall. Neither is an easy do-it-yourself project. If the sagging is only slight, or covering a small area, you can re-attach the plaster to the lath using long drywall screws fitted with plaster washers.
Plaster washers are thin metal disks through which drywall screws are threaded and then driven through the plaster into ceiling joists, wall studs, or lath. The screw/washer duo pulls the loose plaster tight against the framing, fixing the sag and stabilizing the area. The tricky thing is that you can't just wail away with the drill/driver. You've got to go slowly, tightening each screw/washer a little bit at a time, so the plaster is gradually and evenly pulled snugly to the framing.
If your plaster is sagging in one place, it'll probably sag in ten other spots sooner or later. Crumbling plaster tends to become a chronic problem. Why? Your plaster simply may have reached the end of its useful life. Or maybe the original plasterers were learning on the job (not good!). Maybe you've got hidden water damage or rot (trouble!). Maybe your foundation is unstable (big trouble!).
Whatever the underlying cause, sags and serious cracks are problems that probably are going to keep cropping up. You could keep repairing them, but plastering is a difficult job best done by highly skilled, expensive professionals. Instead, you probably need to think about proactively covering your slowly crumbling plaster with a fresh layer of drywall. If you elect to do that, however, it may take some time to get used to having nice straight walls, flat ceilings, and 90-degree corners.