What are your room dimensions? If you could post a rough sketch, with dimensions, that would be extremely helpful and would likely gain you more answers than you even want!

Well it depends on what you want your room to say, orange-fun and bright Blue-calm Green-welcoming Red-warm Or Yellow-happy,for my family room it's yellow and it makes it look a lot bigger then what it used to be. And for the windows I think that you should get light curtains that the light can get through easily because if you have a small place it is good to have a lot of light. I also think that you should get a fireplace. HOPE IT HELPED ;D

For one thing your rug is too small, are you planning on changing it; if so purchase one that is going to fit the room with a space about 12inches from the walls. You want to see a border of flooring.
I’m not too sure if this space is large enough for you to use the solid wall as an entertainment/fireplace, where would you put your furniture?
A sectional is not going to work, not unless you plan on utilizing the long wall as setting.
You can utilize the entrance wall as an entertainment area.
Install French style doors with a stain glass window above the doors.
Build yourself two units, one on either side of the doors.
I’ve attached a photo, where the fire place is would be where the French doors are going.
When you or if you change your furniture then you can decide on paint colours, drapes, pillows and of course a new rug.
I wish you well choosing the right seating plan that you can love.
Post pictures of your finished room.
[houzz=]

Ah, yes, but first it must be decided where the TV will go. And we need measurements to determine furnitue arrangement before that can be decided.

Without measurements of the room, it's impossible to know what fits where, but at first glance, a sitting area ( chair/table ) where the tv is. An entertainment most likely on long wall with a couch or love seat facing tv. The couch would be floating, maybe on an angle. An area rug to define the area in front of the couch. Colors are more about taste and coordinating with fabrics. Very cute house, love the arches and wood floors, arches go well with Tuscan, Spanish, or Art Deco styling. You have to decide your style.

Love the color of the walls and arches! Need a corner hutch to house the tv And CD's. Bigger pictures or one big picture over the couch. More color in the rug! Good luck.

If you aren't too atatched to the wall color which I hope you aren't, then there are some awesome options. A nice burnt orange or a deep honey color on the walls to pull from the warmth of the wood floors...would warm it up. Lose the shelves on the wall the tv stand is too low tv too small or you could raise the unit by putting another one under it...make it look like a bigger unit. Or invest in a flat screen wall mount Couches need a pop of color new throw pillows and a nice throw blanket, corner unit empty it and make it a unique display area for some nice candles a warm glow. Couches if there is room away from the walls this room has great potential I would say get rid of the photos on the wall too small for that big wall get some nice wall art ...home sense is budget friendly. Maybe some cool abstract metal art pieces or a nice picture pulling all your colors together...right now it says Hi we just moved in and we are blah...a new or reinvented media center would be great and would house all the clutter of the cd's speakers tv etc... the vase in the corner needs some life get some new foliage don't have to go expensive Home sense has some great stuff blends of neutrals with a pop of color but do not go over board keep it simple. ;) I saw the built ins above not keen on those...once in you have no options...I like to change things up and they are too static. Fireplace great idea and a double sided one that could be shown between two of the rooms would be warm cozy and elegant...there are some really nice options out there that aren't too expensive. Rug is too blendy blendy with the couches...swap it out for a pop of color...hope this helps!

yep, need dimensions first. Why is there a door into the dining room? I would remove that to make that space look cleaner.

I noticed your entry - black is really in for stairways. Either paint the steps black OR the backs of the steps black, and then paint the railing and post black too (NOT the spindles though)! Would really define that area and connect with the black in that tile floor and the mirror...
Ck out my collection of stairs here: http://pinterest.com/lindasanth/stairs-with-class/

I would get a corner entertainment center that is tall for the TV ( in same corner it is now) and get a larger carpet. remove other corner unit and get a large round table in that corner with a lamp.

I like it

I like the open feeling so I would probably change that arch way to the other room open it up ....

Wow, thanks everyone for the suggestions!! Really, we have lived in this house for 10 years and are finally ready to start tackling the dated decor, so that means everything - including flooring - is up for change. Since the house is smaller and the rooms really do run together I would love to run the same flooring throughout the whole main floor as well; preferably a hardwood - just not a very light color. I am getting together the room dimensions and will post them asap. If anyone is able to look at my ideas books (that might not be possible - I'm newer to this site) to see my style that might help as well. Thanks again for all the help.

Here are the room dimensions...hope it's clear enough :)

I would get a long sleek couch to go under the window. Then I would get 2 tub chairs to go on either side of the arch to the main hall. I would put the tv/bookcase/fireplace in white on the long exterior wall. I would paint the wall a white or cream to tie in with your entrance and add color with accessories and curtains. I large sisel rug would be nice. Invest in a large piece of art for the 4' wall because you will see it when you come in the house. Have fun.