What a lovely space! There's a lot you can do with it! You have a couple of options to help create the feel of a dedicated entry way. It looks like there is enough space between the entry door and the window to place a console table or low book case (shelves facing into the room) extending into the room. This will create a path from the front door. Alternatively, the console table or a bench could be placed on the wall where the closet (?) door is. A runner-sized area rug can also help define the space.

Decide what functions you'd like the space to be home to, such as reading, conversation and/or games and that will help dictate your furniture choices. For space planning, use 1/4 inch graph paper to sketch out the dimensions of the room and then measure the furniture and make cut-outs to scale and arrange them on the paper -- saves from moving the furniture all over the room! I've love to see a symmetrical arrangement on either side of the fireplace - either tall bookcases or low chests with artwork above them. Great space!! Good luck!

I wish my floor looked that shiny!! :) I agree you need something by the door, although if that is a heat unit on the wall? perhaps a table would be a better idea than a shelf. If guests will be coming in and removing coats that will be hung up in the adjoining closet? you want space for the guests to step aside too, so the table shouldn't be too large, perhaps just enough for a vase of flowers or a lamp and perhaps a painting above on the wall.

Should the couch be faced toward the fireplace (with the back toward the front door and closet)? Or should it remain where it is which is facing the opening of the dining/kitchen area?

In general it should face the focal point of the room. If you want the fireplace to be the focal point (and it's a great focal point) and If the couch can fit the width of the room (it's hard to tell from the photos) and still have a good traffic path, then yes! Also, if you use the idea of a console table to help define the entry, then that's perfect; the couch will sit directly in front of the console.

I like the bright and clean look of your space.

Feel free to check out my website for inspiration.
http://angelina-vick.artistwebsites.com/

A few decor ideas.