get a much larger medicine chest. and a much longer unit of the toilet. or a etagere, if there is space to slide it to the right wall . not sure what the dimensions of the space to the left are but you could put a narrow free standing storage there : http://www.target.com/p/threshold-carson-narrow-bookcase-with-storage/-/A-14151613#prodSlot=medium_1_2&term=narrow+bookcase too.

take the small towel rack of the side wall. putt floating shelves there. move the medicine chest to the left but really get a larger one.. put a real towel rack under the window.

It looks like you have room for a double mirror
I'd install shelving over the toilet. I think you can get much more room out of it than what you're getting now
I can't quite tell what color your shower curtain is. Is it blue? If so, I'd go with BM Sea Salt or White Dove. If it's gray, Sweet Honeydew Melon would be a lovely option.
With all those kiddies, I'd consider a large trough sink with a towel bar and storage below.
For the light, I'd go for something long and simple, and white.