Is it the second floor we see or a planked ceiling? And is this your furniture?

For the deco part; start by painting the beam white and repaint the ceiling white and install some bright uplights. This will add visual height. I hope you won't paint all wall panels, they are lovely and add character to your house. There are many ideabooks on wood paneling: http://www.houzz.com/ideabooks/query/wood-paneling and here's a picture search to start with: http://www.houzz.com/%2B%22wood-paneling%22-%2B%22planked-ceiling%22

If you could point out where you want to go style-wise, I'm nearly certain more input will come your way.

First of all congrats on the new place. Good view outside and it looks like tons of room inside. Though I do feel like the layout is influencing the feeling of the space. For example, putting the couch against one of the long walls and then letting the chairs "float" around the TV might actually open up the space more. Also, turning the TV stand into the corner might make the room feel less awkward AND allow for everyone in the room to have a good view! Everything looks good though... the mirror sure does its job and opens up that long wall :)

Paint the paneling and get one coordinating tone on the ceiling - the texture of the wood will still read through. Paint the dining room beyond a deeper tone on the same card.

You need some warmer, lighter tones though - the white and faded black up above there is not helping. Wood stove should be only black thing in this room except for electronics and perhaps one accent piece. Are those your electronics hanging from the ceiling? If so, while you paint, it is a good time to box out some facade with trim that hide drapery hardware and screens and perhaps enclose surround sound speakers on so they don't visually block the glass. I'm going to assume that I'm not looking at your furniture, but if this is yours, then answer back because you will need a warmer wall tone to coordinate with your leather.

If I knew something about your color scheme I could advise you more accurately but here are some great neutrals that will work with the carpet and nearly all colors - the perfect greige
http://www.sherwin-williams.com/homeowners/color/find-and-explore-colors/paint-colors-by-family/SW6073-perfect-greige/ for most of the walls - it is deep enough to show up as a color in a large room like this, but will lighten the room despite its depth. Then two tones down for a dramatic dining area through the wide passage to the adjacent room - http://www.sherwin-williams.com/homeowners/color/find-and-explore-colors/paint-colors-by-family/SW6075-garret-gray/ - use this leftover paint with just a little water and "wash" the gray beam to bring out its wood grain and adjust its color tones in line with all the others. Whatever the other black line on the ceiling dividing the dining and living is, paint it out the ceiling color - if it is flush with the ceiling it should retain that same color tone.
The ceiling needs one coat to harmonize / be in this color family - the lighter shade on the card http://www.sherwin-williams.com/homeowners/color/find-and-explore-colors/paint-colors-by-family/SW6070-heron-plume/

Sconces on wall could be great, but probably you will want to mask them and spray paint the metal tones out in an oil rubbed bronze tone or consider changing them out. You will need a taller baseboard and it is a good time to add more substantial trim around the doors and in the area of the crown moulding - build out that end trim to hide all the fun stuff. Paint all that out a glossy crisp white.

If this is your furniture, then use this card - http://www.sherwin-williams.com/homeowners/color/find-and-explore-colors/paint-colors-by-family/SW6156-ramie/ for the walls, rice grain on the ceiling, sawdust in the anteroom and washing the beam. If this warmer color tone is what you go with, choose an off-white or warm white for your trim.

I concur with rinqreation, tell us whether the existing furniture will stay and what your style is and we can better opine on your general question.

Thanks for the ideas, so much help. This is the previous owners furniture so it is all going. The only furniture we have so far for the room is a leather chesterfield style sofa. the rest is an open canvas. See attached pictures of the adjacent dining room,

This home is near the beach so we are looking for a bright beach or lake house feel.