Thanks for your tip. It looks great - nice job!

Paint it! I had mine painted a medium gray when I bought the house. Looks beautiful with white mantle.

I'd paint it white.

I think because you say it looks too bulky and heavy you should remove the raised hearth. That would make it more contemporary also. If you have the budget, look at alot of images or go to showrooms, and fall in love with a stacked stone (as noted above). Otherwise you could patch the area and then paint the brick white for economy sake. As far as the floor color goes, please send more photos of your existing furniture and more shots of the room.

Thanks for all of your ideas! You're probably right about removing the raised hearth. The idea of painting it has also crossed my mind (nicely done, mistilynnes! - In hindsight, it would have been much easier if we had done much of the remodeling prior to moving in!).
I'm attaching two more pictures of the family room. Overall, it's not a very big space, has the secondary staircase (which we have considered changing out into a spiral staircase to gain some more space, but that's probably not very realistic at this time!), and is mainly used to watch tv/for family movie nights, or playing games.

ok thank you for the pics and more info. Now that I see more of the room, I think part of the design dilemnas are all the masses: each chair reads as a large mass, then so does the sofa, the ottoman, the TV, the area rug and then finally the FP and surround. All are large, visually strong/dark rectangles. This needs to be addressed. My recs are to move the ottoman out of the room and replace with a wood or metal and glass oval or round coffee table. Depending on budget, reface and reconfigure the FP. Move the TV to above the FP. Fall in love with new flooring and install that. Consider replacing your area rug with a statement pattern or color. Look at a lot of photos and house and go with an area rug you all are attracted to. If can't do a sprial staircase right now, which would grab more space (good idea!), paint the railings and step risers cream or white (not the steps themselves). Consider painting the walls a color: what is your color scheme for adjacent rooms? What colors do you love?

Our house is still in the building phase but I love how the library fireplace turned out. We used a 3d wave full body porcelain tile in a cement color. Relatively inexpensive and can probably easily used for refacing. Because it's full bodied the cut tiles look great around the fire box.

This is one of the times I would definitely recommend putting the TV over the fireplace. It only would be a couple of inches higher than you already have it, plus it would be centered for your viewing, and eliminate one of those big 'masses' mentioned by visualizemaven.

We just had this installed, the space between the windows was smaller than the available mantles so we built this.