You seem to have lots of holes in your walls and that leaves little space for arranging furniture and decor. I would consider closing the pass-thru' wall above the sofa. I like palette 4 or 8 for your spaces, if you want to paint. You can leave the painting aside and use the same colors for your furnishings, art and accessories if you prefer. I would probably just keep the chaise and use palette #1 with the chaise as the big accent piece. The other furniture is more dated, oversize for your space and there is too much of it just railroaded against the walls. Decide for sure what to keep, pick a palette and then start shopping for an area rug in palette colors. homedecorators.com is having a sale on rugs.