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If you go with a white subway tile with a shiny glaze effect, vertically laid out, I think that might give the illusion of more height in that area...good luck...

If you want to us wallpaper, maybe you could make it practical by placing behind a glass splash back, allowing the wallpaper to show through.
Otherwise you could add a punch of colour, if you're feeling brave maybe a turquoise or magenta or fire engine red. Neutrals are an easy option and I admit to having used mocca square small tiles in the past.

I've also used red glass tiles as a feature border accompanied by a chrome pencil tile, which gives some colour without being too brazen!

Also, you could pick a colour from within your benchtop, it looks to be marbled or granite so could have some interest colors speckled within.

It appears we are in the same boat; backsplash. Our newly renovated kitchen looks very similar to yours. For twenty years, unlike most of my friends, I had wall paper backsplash mainly due to budget, affordability, even through the last ten years when wall paper fell out of favor. It was easy, inexpensive (relatively speaking), changeable, and durable (with right quality & texture--I used very smooth, pattern with few colors that reflected light). Am thinking about using it again, especially after a designer told me "it's coming back." SW (Sherwin Williams has some new books). Besides, if you don't like it, for less than a couple hundred dollars & minimal elbow grease, you could remove and go with what everyone else now suggests. Also, if you're near a Menard's Home Store, they have a tile-like product that's easy/more inexpensive to install.

I think wall paper is definitely coming back, but I can't quite bring myself to commit - Too many renovations involving scraping wallpaper off I think! But you are right - it's more flexible than tile or glass. I've attached an image of the kitchen where I used the red glass, but it's a little hard to see. The tiles I used in the pic are a coffee colour, the benchtop is stainless steel.

It is your kitchen - go with what you like!

Whoops - failed to tell you how much I enjoy your new kitchen - it sounded in your comments that you have an opinion - go for it!

Stainless would be a great choice. Here's a photo of the stainless backsplash that I'm going to be using in my kitchen (my colors are much the same as yours).

Diagonal travertine.

Found the backsplash; six months later....picture attached (metallic glass brick, champagne)

If you are determined to go with wallpaper, I would follow Tracey's suggestion above and use glass over. Very popular right now!

Here are some I like very much

Oh yes, and these two as well.... they all blend well with a medium tone countertop. You can use one tile and place it in a diamond pattern and borer it with the same or different tiles placed squarely, oe vice versa.....or use two different tiles one as the main iems and the second as a border....

beautiful kitchen! I like the stainless and travertine

I would not use wall paper, once it gets damaged (ie. stained, torn) it needs to be removed; I have seen walls stenciled, which unlike wall paper can usually just be repainted. I got these from:
http://www.cuttingedgestencils.com/

Beautiful! I love the closet turned wine/bar area.