Thanks for the curtain pole suggestion! I agree! Do you think I should change the color of the curtains? Are they too dark?
What if we tilted the tv down a bit on the mount? Do you think that would be ok?

Ditto, the first step is to get longer curtain rods so the drapes rest on the wall when they are open. You might want to mount them higher, midway between the ceiling and the trim if the drapes have enough length. Do the drapes 'puddle' on the floor now?
Ditto, TV over the fireplace should be a last resort, you ARE asking for a sore neck, kids too. Is there another choice for the TV location? More pics?

I am not an expert but I think your curtains are too dark. I think something lighter would help to soften the look and make it look more inviting.

From what I see I think lighter curtains would be better in addition to what was said about wider poles placed higher on the wall.

The drapes hit the floor... they do not puddle. On window in the back of the room, the curtain panel on the left side hits the bottom step of the stairs. How do I address that?
We have a small, narrow den where we have a tv on the wall now. We wanted to hang the tv over the fireplace in the living room because when we have people over, there is not enough room for people to hang out and watch tv in the den.
I added 2 photos from when we first moved into the house 4 years ago. Less furniture but you get a better sense of what the room looks like.

I agree with all the suggestions that have been made. You may want to try a different paint color that is a little more rich in color. if you post more pictures, we can see the room a little better. The colors in the curtains, sofas, and rug are beautiful and easy to work with.

By Design... What color would you suggest?

I would reiterate what has been said already. Widen the curtains and raise them up. I don't think the room or curtains are too dark, it is just those first pictures with the curtains almost closed. You can always add a band of beige silk or linen to the bottom "on purpose" to lengthen them. Perhaps the one that hits the stair can be folded under on an angles or hemmed to not puddle. I would defer to a drapery pro for that since I can't see it.

Please DO NOT put the TV over the fireplace. You have such a lovely sitting area there. My dream room has always been facing sofas in front of a fireplace, where there was no door, window, walkway or TV to consider. You seem to have that!

I think you have a great room to work with.

The issue is, we don't have another room in the house where a group of people can watch tv. This is the only place where we can put a tv. We plan on putting it above the fireplace and tilting it down slightly.

Try Baguette by Sherwin Williams

What is opposite the fireplace? Is there a wall there for the TV or is it all doorways?. I too second the TV NOT being over the fireplace. How about sofas in an L shape with TV on wall by the front door?

Replace the coffee table with a round glass top for a lighter, more open feel.

I have 1 year old twins so a glass table would not work. There would be finger prints all over it. Plus my son loves to bang on things and I don't want it to break.

Opposite the fireplace is an 86" open doorway into the dining room. I

I like your room, and don't know what you mean by needing warmth -Can you be specific? Sort of radical idea but for window by stairs make a valance from the curtain. Because you have white trim, how about white woven wood shades in white, just ideas... http://www.jcpenney.com/shops/back-to-school/jcp-home/jcpenney-home-bamboo-woven-wood-roman-shade/prod.jump?ppId=1d6e1c9&searchTerm=bamboo+blinds&catId=SearchResults&_dyncharset=UTF-8&colorizedImg=DP0711201215281545M.tif

Taking another look at your room--consider painting the brick on the fireplace white like the mantel.

Painting the brick would help do you think? anything to bounce light instead of absorb it..Then what about a lighter color for mirror's frame, or a bit metallic?

For the window by the stairs you could use the curtain fabric to make a Roman shade (or have one made). I wonder if you have enough space to make an L-shape with the two sofas. Could be worth a try though. An other option could be to put the TV on the wall next to the stairs. And have two swivel chairs instead of the sofa nearest to the stairs.

Totally different idea: do you use your dining room? Or do you have an eat in kitchen? Could be an idea to have the TV in your dining room. Or even: place a couple of chairs near the fireplace, have the dining table in your current living room and have the dining room as a comfortable TV/family room.

Some tutorials about making Roman blinds/shades, the first one uses Venetian blinds as a base, the other one is a 'real' Roman blind tutorial with lots of photos guiding you through the process.
http://www.domestically-speaking.com/2011/04/mini-blind-makeover.html
http://jenduncan.typepad.com/whats_new/2008/11/roman-blind-tutorial-in-20-pictures-or-less.html

I agree with Carolins, think outside the box. Could your dining room be a family room and vice versa? It is very nice to dine by a fireplace. Is there furniture in your den that could be brought into this room, 2 chairs instead of a second sofa so that the TV can be on a wall? I would make a roman blind from the drape material for the stair window, or you could install a rod that is wider and move both sides of the curtain to the right in the daytime. This is not ideal, but, I would definitely NOT hem the left side on an angle. Do I see black smoke marks on your fireplace brick, is it wood burning? If you paint it light, you will see the smoke marks again. Change the fireplace to natural gas if you wish to paint it? I think you have lots of warmth in this room, I would hesitate to paint a deeper shade if you are concerned about it feeling dark? Is the paint colour actually paler than the photo shows?

I'd suggest trying a cool color on the wall, like a pale blue, and I'd definitely lighten up that fireplace, either white, or a nice taupe. It might look nice with a whitewash on it, even. I agree with losing the drapes entirely. Go for roman shades, or valances with blinds, if you need the privacy. You have a LOVELY space. I really love your couches and rug.