Creeping thyme is a very short flowering ground cover. It looks especially good spilling over a stone wall, as in this picture. Learn more at http://landscaping.about.com/od/herbplants/p/creeping_thyme.htm
Lay perforated drainage tubing at base. Water-soaked soil is the worst enemy of retaining walls because it exerts enormous pressure behind the wall. Adding good drainage behind block or stone walls is crucial for long-lasting, bulge-free walls. Start by laying perforated plastic drainage tubing along the base of the wall slightly above ground level so it can drain to daylight. Slope the tubing about 1/4" per foot.