As Maltby suggested. Just don't use a tumbled stone, go with ceramic or glass for a new look that'll last 5-10 years. Update the pendants, too.

With such a neutral pallet you have an unlimited selection. Depending on the style you are going for your choices can span from stainless steal to bead board. I have uploaded a few different selections for you to ponder.

Thank you all. I really love the look of the subway tiles. Regarding the pendant lights, we did think of a simple fix of just changing out the shades. The hardest part of this project is finding a tile that meshes well with countertop and cabinet. Depending on lighting, the counter takes on either a taupy warm look or a cooler greenish tone. Really tough! If I could find a crackled tile, I think that would be my first choice. Any thoughts on whether to do an accent tile? I am thinking maybe 2 rows of a glass tile for that.

We just finished a kitchen renovation. Went very simple white crackled subway tiles. I thought it would be boring but trust me, once your canisters and decorative bowls, accessories are on the counter, you have plenty of color and interest ! You could go with any shade of subway tile ( not white) and no mosaic tile accent needed. Maybe do in a herringbone pattern for whole backsplash or as accent over stove.

Picture is of our subway tiles and stove accent. This was before white grouting.

Your kitchen looks great by the way!

Oh and I like your pendant lights:)

First decide the look you want- modern? Snazzy? Uniform? Draw attention? Tropical? Keeping the pennants ?- then do something similar in the backsplash; the above post did a nice job in showing a variety.

When I can't quite choose, then I know I don' t have enough of information in which to make a decision:) explore what style will be your style:)

Please don't do an accent tile - that will date your kitchen quickly. I would do a simple, classic porcelain subway tile to complement the countertop. Nice job!

My fav look for your kitchen would be to use the countertop material and do full backsplash.

Oops sorry, missed your post on liking subway tiles:)

Not a huge fan of the pendants so most likely they will go at some point. Casual contemporary is my style. Don't want it too snazzy that's why looking for a crackled tile because I think that would add character without too much bling.

http://houzz.com/photos/3179888

Maybe something like this??

If you decide on a solid backsplash then you might want to use the Angled Power Strips. The provide the outlets for the room and mount up under the cabinet and they angle down at a 45 degree angle. With them you don't need to cut holes in the solid backsplash for outlets.