Since you already have a short backsplash in the material of your counters, I would not add another one. Instead, I think your instinct is right to use paint. I would paint the wall a neutral, lighter color--one of the lightest shades taken from the colors in the floor or counters. The idea is for the space above the counter to both lighten the room and not compete with the other surfaces.

I also vote "cream", picked from the tones on the floor. Like a cream subway...no more patterns need apply! Something very neutral. It's a very pretty kitchen, I think a lighter/brighter backsplash would perk it up. If you're unsure, you could paint a large sample first in the same color of the tile you're thinking of, to see if it works, color-wise. I love it all, the counter is a bit of a tricky color, and the terra cotta paint you have doesn't do the beautiful cabinetry justice.

Maybe something simple and light, like a white or cream subway tile.

Look how pretty the cupboards are next to the ceiling. Try for that same effect with that lighter color under the cupboards, too.

Would love to see this once it gets painted and with some fun accessories on the counter. Yellow and orange maybe???