I would start with painting it and removing the brass firescreen and update with a new firescreen. I'd also paint your paneling. If keeping the gray carpeting, I might paint your fireplace charcoal gray and the paneling a complimentary medium gray. That would make it look more modern, especially next to your stone/concrete hearth. Also, I'd eventually update the stair banister.

We are replacing the banister with a black rod iron one, and replacing the panelling with wainscotting and bringing the wainscotting up the stairs. The carpet is berber that is mixed colors, but mainly grey. Budget wont allow us to replace it until next year. If the furniture is traditional, dark woods and leather couches, would you still do charcoal grey for fp?

What color will the wainscotting be?

some type of white

If that's the case, I may not paint the brick. I have a used brick fireplace in my house with paneling painted white and traditional brown leather furniture. I painted my walls a complementary gray green that coordinates with the brick. It looks good with new accessories for the fireplace (new screen and art).

Replace the brass screen with a black iron one to complement your new railings.

is your brick similar in color? and what was the name of your paint that you used?

great call on the black iron screen too!

Yes, my brick is used brick like yours with reds and grays.
I used Dunn Edwards paint...color is Calico Rock. I have Swiss Coffee on my paneling.

ok perfect. Thanks!!

Benjamin Moore's escarpment grey is nice with white wainscoting. I agree with simple black iron railing - will look quite nice :)

I like it, looked up the grey. I can picture it with the white wainscoting. So now, window treatment? its such an oddly placed window. Any suggestions?

A black iron drapery rod at ceiling height then grommet drapery panels on both sides (to the floor) to create some separation between the window and fireplace. Extend the rod over towards your staircase and balance the window out by having the panels shift to the left. If you need light control, add a blind or shade under the drapery panels.

Two options for suggestions to update your basement fireplace wall: 1. Remove the brick and add drywall - Update look with horizontal banding (stripes) by painting stripes (save) or use mosaic tile (splurge). 2. Keep the brick, but cover the rest of the wall in brick and paint all in white.

Along with either option: Place a mirror above fireplace to balance window plus add light to the space. Could also create a picture ledge across width of wall to lean framed photos. Since you are looking to update space, I would also suggest skipping the wall dado (chair rail molding) - The space seems to have low ceilings, especially with the tie beam cutting across the space. A chair rail may cut the room even more.

Also came across this blog post (at Pinterest) to DIY a fireplace update in 24hrs: http://www.infarrantlycreative.net/2012/09/how-to-paint-a-brick-fireplace.html Hope this helps! :)