It's a question of what functions do you need. Just because a room is labeled "dining room" doesn't mean it has to be used as such. Do you need a play space? An office area? Do you play any musical instruments? A game room? Are the rooms able to be closed off at all? If so, then maybe a messy space like a craft room/homework room could be created. Do you like to read? A library could be a wonderful space for a combo of reading and quiet space plus be used for more adult entertaining. The possibilities are endless, but they'll only work if they meet a function your family requires.

It's a little hard to see the colors in your space now. I take it you took the pictures in the evening hours as you have the lights on. What color is the carpet, light brown/chocolate? How much sun light do you get in the space during day time hours?

I would first of all paint the fireplace all white. The bricks are not very attractive and having one color will give a more cohesive look. The carpet color looks somehow dated and not very exciting. I would find a thin, patterned rug in beautiful colors to put over it. Your bare walls badly need art on them, and they can be quite large pieces since you have lots of room. Buy only what you love to give this space some personality. The rug can be polypropylene which is thin and will wear well and can even be washed. You can let the rug and the art be your inspiration for the color of the couch and other soft furnishings.

Agree with Annie about not letting labels dictate how you use your rooms/house.

Our current house has a living room, dining room, family room and one more large living space. We use the living room in the front as the TV room, the central open family room is more formal, the dining room as labeled, and the extra living space is the kids playroom with another TV and their desks/computers/storage.

There used to be just a hallway opening between the playroom and the central family room. I had a contractor add a door, so that we don't have to worry about keeping it perfectly neat and it is nice being able to close the door when there are several kids playing a noisy game.

I love not having the main TV in the central open family room. Much nicer being in the kitchen without having to put up with sports shows.