It depends on your budget..you could whitewash the brick and paint the trim white or box it in and add a mantle. No matter what direction, I would also update the fireplace surround/screen.

There are many ways to tackle this, but knowing your style (furnishings you'll be using) would give us a better idea of what to suggest. I think you should search the box above under Photos using the tag "two-story fireplace." Start an ideabook for this room and add the ones that appeal to you, so we can see what you like. Is your furniture traditional, contemporary, transitional, etc?

I am buying a new dark gray leather sectional, painting the walls with SW worldly gray (very light gray) and will change out the screen which is brass and add a mantle. I am thinking of ledgestone in desert tan which has a lot of gray in it. The floors will be wood and I have a large rug in teals and grays for the area in front of the fireplace.

Here is some idea how to decorate wall

I love this Antares tiles .There is gray color too. Walls are BM revere pewter

Agree with Beverly about considering the window frame color when making these decisions, even with wall paint and sofa fabric. They are almost as major a statement as the fireplace, and you can't change them.

Because of its grandeur (the whole window ...brick.. side framework) it needs to be the drop dead wonderful feature of the room..from your description of your furniture it sounds like it needs to be clean and modern..the brick just doesn't fit that picture..perhaps another's stone or even natural wood(aged barn wood?.)would be the place to go with this...if cost is prohibitive for these options..sheet rock and a gorgeous paint color could get you there too..setting you up with an opportunity to install some great art there or a hidden tv..searching photos would really help you define the look you would be happy with..

Adding a hearth would also help anchor all this

I want to cover it with stacked stone veneer called ledgestone. I think that and a dark mantle to match the windows would really help update the room.

Quartzite Ledgestone is way to trendy and on it's way out IMO and not worth the expense when you have perfectly good brick which is timeless.

For an inexpensive change have the brick fireplace and window frames painted about 2 shades darker than the walls.

The ledge stone in the photo looks lovely ...color and style much more contemporary..fresh..