In my daughter's basement, we went with really good pot lights in the ceiling - lots of pot lights. We then put up drywall, well insulated behind - that made it feel much warmer. Then we painted the walls an old Martha Stewart for K-Mart paint color, "Flower Pot", a slightly orangey, pinky red. It warmed it up. Ceiling was painted a very, very pale robin's egg blue - so pale it has to be next to white to see it's not. Carpet was a taupe with a black grill pattern. It still looks great today and is light and warm and cozy.