Start selecting a nice rug and take the colors over to the othe items.

Create a focal point and go sharp!

Here are a few photos that may spark some inspiration with your living room redo. These pieces from my handmade, original metal art collection would make a great focal point in any space.

Or even adding a clock above your mantel could be a nice touch, here is an example:
Here is the same piece but in more of a neutral color.

Happy decorating! Statements2000 - Fine Metal Art by Jon Allen

Are the blinds over a doorway? I'd love to swap the sofa and tv...

The problem with TV being too high above the fire place can be solved with using a special rotating arm

also since the room is small you need mirrors on both sides of the fireplace to make it bigger like http://sainteriordesignstoronto.com/fire-to-the-rain.html

Painting the room and washing over the brick will help trenmendously. Be careful with the beige color that you pick either lighter or darker than your sectional so there is still some contrast. Also when selecting beige, they can have different undertones to them. Take a few strips and look at them side by side-you'll see. Go for one with a brown undertone. Also, get a sample and look at it in all kinds of of light. I would also wait to wash over the brick until you paint. My fear is that because everything is a light color now the tv is going to become the focal point. You rug is great and has texture so I wouldn't do an area rug. Get some throw pillows to add color and pattern. I would angle your short sectional piece toward the sofa. I'd get rid of the little ottoman (if the guys can live without it) or get a smaller version of the one you have. Add a white washed tray to your larger ottoman for drinks. You can paint the fire screen just us high-heat paint. I love the accessories on you FP. I'm would move the clock. I would get a black bookcase about the same height as TV and put your little photos and books and chotchkees in there. I like the circle detail on the bottom of your TV cabinet. I would get a light colored wallpaper with that design and put in on the back of the bookcase. Just do this before you put the thing together. I like to keep a fake (or real) fern in front of firebox when not in use. Helps to soften and bring in some of the outdoors. Get rid or tocheire light and replace with end table and lamp. I'd replace the lamp on the other side to something more rustic and white washed but with black lampshades to get some black on the other side of the room. I'd put the clock over the small sectional. Then I would create a family collage in canvas for over the sectional. You can get them done over the Internet and then you just put the frame together and staple on the canvas. I would put a word plaque over the opening. Get new drapery panels with some color and pattern and ditch the slats. I would go light weight muslin on traverse rod. Sorry so long-I'm a detail oriented person.

Muslin panels

Nancy, I love your ideas and feel like they are right in line with what I'd like to see change in the room. Thanks for the details - that's just what I need!

Decoenthusiaste, I'm not sure what you mean about the "L" with the sofa. I would like to place chairs in the room instead of the other piece of the sectional.

The vertical blinds (which I am planning on removing) are over a sliding glass door. So, I only have a full wall on the side the couch is on now.

That's what I mean. Remove the piece of sectional and float two chairs facing the FP with their backs to the opening to the other room. They would be the foot of the "L" and the sofa would be the upright part. You can add something tall (plant or bookcase) in the corner where the sectional piece was.

Here is an update on my slow progress. I painted the family room a beige. The lighting is not good since I haven't much back in the room. I also painted the fireplace surround. Any comments on whether I should whitewash the brick? I would like to lighten it up some.

I would try painting the mantel and see how you feel. I'm liking it better now that the walls have been painted-good job!

I would like to see the mantel lowered. It seems too high. Painting the fireplace will give the room a more formal look, which is fine if that is what you want. I don't think you can paint brass.