What a mess! Been there at a different house.

If you have the chance to improve the lighting do so. Can lights and sconces all with dimmers can make the space.

Our basement is a basic one, no English or walk-out. We finished it with many functional areas within a greatroom concept. To set them apart we used different wall colors and hung colorful prints on the white walls. May not be your taste but the main rooms of our home are rather formal and we wanted the basement to be a very comfortable place to relax.

I've linked photos, perhaps some ideas.

Here is a link that might be useful: Our Basement

Look for a brown-toned wall-to-wall carpeting -- perhaps even check out industrial carpeting? Very neutral -- and will work well with your furniture ......

Then put in your furniture along with the tables and lamps (oil rubbed bronze? - just a thought!) Look again around the room in all lights .... perhaps consider track lighting?

Perhaps a pale gold on the walls? (light but still warm?) Maybe Laura Ashley Gold #2 or #3? (available at Lowes)

THEN add your accent colors like olive or sage or oregano green; dark roasted pumpkin, dark barn red etc. in artworks (posters, prints etc.) or cushions (how about floor cushions?) How about adding a couple of large bulletin boards for the kids' artworks?

Just some thoughts!

Jan at Rosemary Cottage

Do you really want carpet or would a good tile work just as well?

I absolutely adore my new smartstrand by mohawk carpet (you can get it for ~$2.00/sqft at home depot right now). That being said, I'd agree with Patricia - if your home is prone to problems with sewage/plumbing/leaks perhaps a tile with nice rugs is better. I've also heard carpet tiles are a great option in the basement so it's easy to change out

Nice pictures, fnmroberts! Thanks for your comments.

We really, really want carpet. (Although I may come back asking about tile when we update the other part of our basement with the walkout - eventually want that to be more of a "mudroom" since it has the walkout and open stairs up to the kitchen - it's really separate from this part of the basement though)

Thanks for your thoughts Jan. I thought about gold too, but wasn't sure how it would look with the furniture. Your descriptions sounds like my style though.

I should clarify about the lighting - we have tons of recessed lighting down there. I don't think that needs any improvement (or really could be improved). However, I still think no matter how much lighting you have a basement is always going to have a darker or at least different feel because there is not much natural light, and I want to factor that into our decisions.

Keep the ideas coming please! Any pictures anyone has to share are greatly appreciated! :-)

Thanks vivachick - I missed your message before. I've heard of the smartstrand on the flooring forum just now, but need to look into it more. What does smartstrand mean?

We have a generally very dry basement. No basement smells, nothing. Never had a problem until this freak accident (a joint gave way in the plumbing), so I'm really not concerned about water issues. Especially since when everything was cleaned up, the only places that were yucky were the places where the leak had happened, so there had not been any previous leaks/seepage etc.
I think tile is too cold and hard for our basement - we live in the Northeast and it's cold up here!

We just finished a room in our basement and we used a carpet (which I have linked for you) called Panama Canal from Blue Planet. It is industrial and we had it cut to "almost" go wall to wall. We painted a concrete floor underneath and laid the carpet on top.
It is absolutely beautiful. I can't tell you how many compliments we have gotten on it. It would go beautifully with your color furniture.
http://www.blueplanetcarpet.com/ModernWonders.htm