Oh, this could be a great space. Have you ever read the book "Where Women Create"? It's a great book and inspired me to make my studio space something very personal, functional and totally ME. Of course, lots depends on what your craft interest is and your storage and workspace needs. It's now my favorite room in the house, with ideas I pulled from the book.

http://www.amazon.com/Where-Women-Create-Inspiring-Extraordinary/dp/B0044KN32O

What a great room! I want a womancave! It is your womancave, let your personality shine through. I would paint your window trim and baseboards white that goes with your wall colour, whether bright white, off white or cream depending on what you choose for walls. Keep the wall mouldings but paint them out the wall colour, adds subtle dimension. Paint inside the niches some great colour or trim white depending on what else is going on in the room. I would love to see the thickness of the shelves themselves appear thicker. Add some small wood trim to make them appear 1 -1 1/2" thick. I don't know if you are a girly glam girl or rustic or antiques. Decorate it in a style that makes you happy and comfortable.

I suggest a counter height (36") dining table with 4 -6 comfortable chairs to have 3-4 girlfriends over to craft, paint drink wine, have vinyl cover made so can use the table as a craft table, either standing or sitting. A great small sofa and ottoman used as coffee table in the niche I would use for books and decorative items and create a reading area. Remember good lighting there. I would have the dining/craft table share space with a desk for your personal business and scrapbooking say, I don't know your craft. Then you have the awesome walk in closet for all the craft, wrapping stuff! Lucky girl!

How about built in bench seating, chaise, or a chair and ottoman in that nook for a reading area.

I am so glad nobody said a daybed for the niche area. The previous owner had a beautiful daybed there and I thought I should do the same thing. But my gut keeps telling me "reading nook" because I love books and cozy spaces. I love the work table idea. I love crafting/scrapping/painting (anything really).

At first I thought I would buy new things(chair, ottoman, table etc) but now I think I am going to put this all together myself - with awesome finds at resale/garage sales. Maybe refinish a cool table or add new fabric to a unique but cozy chair.

For the wall color I was thinking of BM Mount Saint Anne ( a beautiful blue. Thanks for all the ideas.

Should the workspace go right in the middle of the room?

I was thinking of putting wood laminate down.

I am excited now!

Thanks Rocketjcat I am going to check that book out.

That sounds really exciting lisajane! I would definitely look at garage sales and furniture consignment stores for a table since you want to craft on it, you don't want to be afraid of scratching it and or spilling paint, but a vinyl table cloth, you can find solid ones that don't look like a picnic at grandma's house, that works in your colour scheme would be good if you do paint. I would definitely want to get rid of the carpet and laminate would be easy cleanup. I am a crafter too, it gets messy sometimes. I just recommend you really consider how you like to work, do you like to spread things out, leave them out, have numerous things going on at one time, do you prefer to stand or sit? Those answers will lead you to table height and size that works for you within the confines of the room space. Also consider how you like to read, curled up in a big cozy chair, laying out on sofa, how many people are using the space to read? A nice small area rug with a comfy chair and ottoman and side table and reading lamp could be great in the nook. I too like the sounds of that book recommended by another houzzer, I think I will look into it. Have fun with this project!

A craft room designed with one of a kind pieces you reinvent and repurpose, what could be more perfect! There are also a lot of inspiration ideas on Houzz and on Pinterest, just search craft room. For my room since I am one of those echoes desk is overflowing when working on something, I bought one of these carts from ikea. I have it beside my chair, and now I'm not burying scissors, tape etc.
http://www.ikea.com/ca/en/catalog/products/30216536/

I love the Ikea cart - kind of retro looking. Is it blue? That would match well. Thanks! I like the idea of a counter on one of the walls and a craft table in the middle. I will have to post pictures as it comes along.

The cart is turquoise and it's metal. It's also available in dark grey and beige I think. And it's metal.

Oops.. Said that twice..haha!