Neutral works for me all day long! Roman shades can be pulled up to let the sun in - or not!

a great space! and i love the rug. truely, you can never go wrong with simple, straight hanging curtain panels, hung from decorative rods mounted slightly higher and wider than the windows...this will make windows appear larger, and the fabric will soften the hard edges and they will help to fill in some empty wall space and gives a space an overall "finished" look. on the slider you could hang coordinating side panels or a tailored valance, or leave them free of fabric altogether. in my home i have my curtains layered over inexpensive woven grass roman shades, which adds such a nice element of texture into the space (jcpenney.com!). i'd go with curtain in white or perhaps a light blue from the rug. pillows should also coordinate with the palette of the rug. table and floor lamps (not torchieres!) will also help finish the space. they cast a lower, more flattering, warmer glow of light at night than overhead lighting...and they add style and charm...lamps need not match one another, but be sure all shades are the same color. the dark turquoise in the rug is a great color...repeat that color with a few not too small accessories. a lovely space! keep us posted!

The issue with drapes is with the fireplace next to windows, you won't be able to hang the drapes outside of window and they will cover up them.... Unless the angle is deceiving me.

Love your color choices. You could either do simple linen panels or roman shade (inside mount). I would pick a color slightly darker or slightly lighter than your beautiful and fresh wall color. You could also choose the bluish/green color in your area rug and find some pillows in those same colors to tie it all together. Good luck.

simple linen panels

when you turn the FP on, simply side the innermost curtain panels away from the FP, if that is a concern...return them when off. i'm sure the time you will spend with the FP on, is limited.

I say Patterned or colorful/neutral Roman shades or burlap would be pretty!

Yes, the fireplace is close to the window. I just measured and there are about 6 1/2 inches from the window sill max to the granite bench at the foot of the fireplace. I'm not sure if that is enough room for drapes to hang to the floor and be outside the window or not. I think it is worth the experiment. Thank you sincerely for the suggestions so far. You are all wonderful.

I say a bamboo type shade for that natural look - love your wall color!

Those look like narrow depth windows, so take that into consideration when choosing. Hard to do an inside mount when narrow but is possible to do an outside mount. Roman with blue to pick up the photo goes so well with gray. Even bamboo to add texture, to bring in FP base color, and for ease of rolling.

It's a nice space, and as other's I like your wall paint color. Do you mind sharing which interior gray it is?

A simple cornice that extends a few inches below the casing with soft roman shades that compliments the rug would be nice. You could even do panels that stack to the center/corner wall when open.

To avamom2012 - the paint color is BM Balboa Mist and we have it in all the downstairs except the powder room. It is a lovely color and looks great with blues/pinks/peaches/browns... but not so much with our previous light moss green couches (FYI).

I would go with bamboo roman shades. Cannot tell colors in your chairs but the floral pillows on the couch (beautiful by the way) do not complement that blue rug.

I love the white trim woodwork detail of the windows and how they match the nice fireplace mantel. I recommend highlighting that feature by installing 2" white wood blinds set inside the window. You will have the option to open all the way up for a beautiful outside view or close them and angle them for privacy while letting in the light. Add a nice high rod above each to hang grommet linen panels. Martha Stewart Home has good quality and affordable lined ones. Pretty Room!

Slightly O/T but perhaps not:

Acumen Builders or others: can 2" wood blinds be installed inside when window side trim depth is 3/4" to 1" and still open and shut without hitting the windows themselves? I have this depth problem, and have been limited to 3/4" blinds which are not in style anymore. Same when I had plantation shutters.

If you do an outside mount with nice wood blinds, it should probably be the smallest width from the window edge bilaterally to look good, yes? Who makes a cordless, good quality wood blind if you know. Thank you all, hope this helps OP too.

What a lovely space! You have so much beautiful natural light, so it's easy to see why you'd like to keep that and your view outside. For the window coverings, you have a few options to consider. If you choose the right openness, solar shades will let you keep the window covered, let in filtered light, block glare, and let you see outside when the shades are drawn. Not to mention they're sleek and modern.

http://www.selectblinds.com/rollershades/5-percent-solar-shades.html

http://www.selectblinds.com/solarshades/solar-screen-ten-percent-roller-shades.html

Sheer shades would be lovely, too. They're like traditional blinds except the slats are made of soft fabric and it has a sheer fabric overlay. So you can keep the slats open and still get great filtered light while being able to see outside.

http://www.selectblinds.com/sheershades/sheer-light-filtering-shades-3-inch.html

http://www.selectblinds.com/sheershades/lightfiltering-sheer-shades.html

Good luck!