I think a large full-length curtain would overwhelm the small space and make the tub feel closed in. I'd stick with a regular size curtain on the outside of the plastic liner. The outside curtain need not be vinyl, though, if you've got the liner. Find a nice cloth one and it'll look great.

BTW, love your decor. You've done a great job with the color.

Thank you weedyacres. I wondered about that but thought a cloth curtain might dress it up a bit. But that is one thing I like about a clear or light vinyl curtain alone; it seems to disappear and make the small bathroom look larger.

I would get a cloth curtain, but without any fru fru in a space that small. Maybe just plain white with, at most, a blue band to tie it in. Pushed to the end it won't make the space look small (Don't keep it pulled closed all the time).

May I ask recomendations for quality curtains. Vinyl that stays soft with out creases or nylon/fabric type that don't blow in? A curtain for a small space that when pushed back stays together rather than billowing out?

I second the vote for white with one navy border/stripe -- sort of the hotel chic/minimalist style, possibly using a white fabric with an interesting texture such as waffle weave. I'm attaching a link to a RH shower curtain but you can just put ribbon on a plain white one if you're handy.

I also love your decor! Yellow and navy look so sharp together! I have the same beachy pix. Is the countertop laminate or something else?

Here is a link that might be useful: RH Italian satin stitch hotel shower curtain

That's pretty bluekitobsessed. Yes, the countertop is laminate. I liked it 13 years ago but wish I had put in something a little more traditional now. Oh well.

If bluekit's is out of your budget, Target has a nice waffle weave plain white curtain, too.

I have to have a vinyl one (boo) because I use henna on my hair and it's messy to apply. I very much like the Oxford White curtains that Lowe's carries. They take a while to hang out all the folds from the packaging, but they behave well and look pretty much like cloth till you get up close. (Unfortunately they don't put that stuff on their website, but they have them in the aisle with the towel bars and such.)

I just got an ivory in a lightweight parachute fabric from Bed Bath & Beyond. It comes in white also (as well as colors). That might work over your clear vinyl liner, and you could keep it pushed to the side to avoid the bathroom "cut off" look.

Not to be rude...but just my opinion...that plastic liner, it's not disapearing to my eyes. Its screaming...cheap plastic. (I hate those things with a passion...can you tell?)

You can buy a very inexpensive one that is water proof to be used as a liner. It's not stiff, and actually would look better than what you have now without doing anything else. I would then add a white cotton or waffle cloth on the outside. I think of showers like I do windows. I wouldnt put plastic over the window and hope you don't see it. Instead, if I had say plastic blinds, I'd cover those with a nice fabric treatment so you only see the blinds when closed, but mostly they're hidden under nice fabric.

This is off topic, but I just had to say that if you shower in this room, you should definitely consider putting in a crescent shower rod. They are not that expensive. I was surprised how much more spacious it feels inside.
If I had your bathroom, I would put a plain white cloth curtain in front of the vinyl, and keep it pushed open anyway. Just as weedyacres said.
I think your bathroom looks very nice and crisp. I don't really think that you need to go up to the top of the tile.