First take down the heavy drapes and take pix again. My guess is the sponged ceiling will still be dated if you paint a new color on the walls. Paint colors are usually selected to work with your fabrics and textiles, so we need to see the bedding, rugs, etc. I'd hate to let that old ceiling dictate what you do.

I would paint that ceiling white and be done with it.

Are you happy with the ceiling color? If not, using a slight amount of the wall color you are going with into the white ceiling paint. If you use a stark white ceiling color it will visually bring the ceiling lower.

I would personally want to replace the draperies with a color similar to the new wall color you go with. Your room will appear much larger this way. Draperies could be lined for light control as well.