If you have photo's of the room and its' current furnishings, it would help us to offer suggestions.

First, do you have any table/floor/bedside lamps? There is no reason I can think of to have only a ceiling light in any room, so if you don't yet have any, add some! It will make a huge difference.

Also, maybe you could use blinds or shades that can be pulled up rather than down to add privacy, but allow in light during the day. Then, just close your draperies at night. There are some lovely shades that appear to let light in through them as well, but through which you can't see (some of my neighbors have these). Sheers could also do the trick if you like that look better than the bottom-up shades.

Others here can advise you better on paint colors. None of my windows face north except the ones in the garage. :)

Regardless of paint color, I would say that you need to supplement your single overhead light with bedside table lamps, wall sconces, and/or floor lamp. In a bedroom, I would reserve the bright overhead light for cleaning days, or alternatively, make the overhead light a feature by hanging a chandelier or other decorative accent light -- maybe something that throws a pretty pattern of light onto the ceiling.

I would probably choose a more saturated color for paint. You should test the paint color under the type of artificial light that will be used in the room. For window treatments, I'd probably do a semi-sheer drape or inside-mount shade for daytime privacy, plus drapes to pull at night to block light, plus add softness and interest to your room.

In a situation where my client had two bedroom windows one of which had a streetlight you could reach out and touch in front of it (its an alley), and a window air conditioner it required a complex window treatment.

For daytime privacy from windows ten feet away: white sheers

For complete blockout of light at night that still allowed the air conditioner to function: a block-out roller shade.

For light sealing at the edges and some decorative aspect: panels on a rod that wrapped to the wall.

It seems like a lot to have three treatments on a window but anything less would have not worked under one of the conditions.

Here are things before and in progress:

There's the streetlight

Treatments up, still needs to be painted:

Could you install some kind of outdoor screen to block their view into your room? Something not up close to the window, but out 5' or so (depending on where your property line is)? That would give you the option of having your window coverings open during the day and still have privacy and just use window treatments for darkness at night. I was thinking of a simple but sturdy frame with a decorative panel (or two) of frosted glass or acrylic hanging from the top. You could have a screen of lattice and plant a thick growing vine on it, but that might take some time to get fully filled in. But it would be better than looking in their window. You could even look for an old glass door to hang on a frame (horizontally or vertically), then frost the glass, paint it an amazing color and have garden art. I've even seen them made from old shower doors. They could be more refined than these examples, but just to give you an idea:
Here's an old door made into a planter:
{{!gwi}}

Here is one made from old windows, which you'd have to frost for privacy:

Here is a link that might be useful: Outdoor privacy screens

In addition to Pal's suggestions regarding the window treatments, I also think the film is a good idea. Having a window under those circumstances would drive me bananas and having a film as a double layer for privacy would give me piece of mind, especially since you say they have no treatments at all.

My neighbor's living room windows are about 12 feet from my bedroom windows, so I understand what your issues are. Like Palimpsset's client, I have the triple layer window treatment. Light blocking roller shades for night-time privacy. Embroidered sheers hung very, very full for daytime privacy (I'd say twice as full as Pal's pictures). And panels hanging at the sides for pretty, and to keep light from getting in around the edges. I hardly ever pull the panels closed. The sheers let in tons of sunlight, so I don't think they make the room much darker than plain, unadorned windows would.

If you want a more modern look (the triple treatment works in my 1920s house because it looks a lot like what the original owners might have had), you could do a top-down pleated blackout shade and window frosting.

As for paint colors, I also have a north/north west facing room (not my bedroom). When I moved in, it was painted a medium Wedgewood bluish sort of color, with a lot of gray. It was not an inviting room. Now it's painted BM Muslin, a much warmer color and I spend a lot more time in there.

A rule of thumb that I read somewhere is that for rooms that get lots of sunlight, paint them a cooler color, like blue or green. A room that gets little sunlight, paint a warmer color to compensate. A sandy tan color might go with your navy blue, if you want to use the picture as a starting point for your color scheme.

For the lighting, add some lamps. I have a lamp on either side of the bed, one on the bookcase and one on my dresser. And I'd like to add another one somewhere, if I could figure out where. The ceiling light only gets used when I'm cleaning the room.

I just wanted to post to say thanks for the help! I especially love your story, Palimpsest--it just goes to prove that no matter how bad your situation is, somebody has it worse. And it offer good possibilities for solutions.

I especially like olychick's idea for a OUTSIDE screen. Of all the suggestions, I think that would make me the most happy. Unfortunately, I think it is a bit more of a construction project than I want to take on--my house is a 1910 Edwardian and the bottoms of the first floor windows are at least 7 ft off the ground. I'd have to build something 12 ft high to do the trick. Maybe someday, but not now.

I'll be looking into fuller sheers (I have sheers now, but they leave me feeling really exposed), blinds that can be pulled down from the top, and/or window film.

Thanks so much for the suggestions, and sorry it to me so long to read them and respond.