I have to (Want to) keep this layout. Kitchen is long and very narrow.

The fridge is counter depth. The peninsula gives me much needed counter space and storage beneath. The cabinet next to the fridge could be taken out if i needed to. There is a door to a little pantry on the other side of the fridge where my water heater is. The other side of the room not shown in the picture has a table and chairs, bench seat with storage and hoosier cabinet.

Without knowing much more I would add a nicer panel on the end of the pantry prior to painting, as well as a custom cabinet over the fridge the height of the pantry. Other wise paint all one color, then new counters and backsplash. More recessed cans instead of the track light.

First off, I think you should postpone meeting with a contractor until you have a better idea of what you want. You are fixing to spend a lot of money on things that you will have to live with for a long time. Don't rush it! The internet is chock full of pictures to give you inspiration. Peruse and pin until your head swims. Then take a few days off. Go back over what you've saved and see what still appeals. Talk it over with people close to you. Someone who already knows your taste will give you better advice than perfect strangers.

That said, there are two things that jump out at me. First is the lighting. What you have seems very inadequate. It might be a good idea to get a lighting designer involved instead of just your general contractor. Secondly, no matter what color or materials you use, you need a counter that terminates where it meets the wall and a backsplash that goes up to the bottom of the cabinets. The bullnose, integrated backsplash is very dated.

I also noticed the Diego Rivera print and sun. Do you live in the Southwest? I'm a pretty big fan of design which reflects the region in which one lives. If you do live in the Southwest, you could use much bolder colors than what the rest of the country is comfortable with. I live in New Mexico, and I am toying with the idea of painting my ubiquitous, golden oak cabinets red. I find the current craze for all white kitchens a total snooze. However, it's your kitchen, and it needs to make you happy. Seriously. Don't spend a dime until you figure out what will make you smile every time you walk into the room.

More questions: can you reconfigure the pantry/water heater closet to permit a recessed fridge? Can it be reconfigured to be more efficient storage for other items? Can you remove the hoosier cabinet in favor of more cabinets for storage? If you did any of these, would you still need the peninsula?

Lighting would be my primary focus, first. how can you see in there?? remove the track lighting and look into doing at least 6 recessed, LED lights. put in 2 pendants over the bar area.

it will make such a difference you'll wonder how you managed prior.

think about trimming out your peninsula w/trim molding. it would also help to beef up that piece as it currently looks 'thin'. you don't have to do this beadboard, it can be smooth, but something along this order.

ditto for the side of the pantry.

If you can't afford to move anything, then painting would surely help lighten up the room. I don't know if Id do the two-tone in this small space. plus, the bottom half would look new and the top, 25 years old. just paint the whole thing.