Formalizing and making it cozy seem like opposites to me. Sophie's right about gray being cold. Instead of starting over as she suggested, I would add some warm colors. Pick a warm accent color for the room. I would start with a colorful, patterned rug, then pick colors out of it for throw pillows. I think you need a larger piece of art over the fireplace. Something that isn't of you is typically more inviting to others, but its your house, so pick something you like. The art should also pick up on similar colors to those in the rug. You could start with art instead of the rug if you find something you like I would get a wood coffee table, something a little less formal, to add some live to the space. Or a glass one and add some plants for life.

I like the pattern in this rug (but not the paisley addition as much).

This one goes well with your art and you could pull blue and yellow out for pillows.

I painted it the Revere Pewter since it was a popular color and I understand gray isn’t always inviting (open for other paint color ideas though) I do like the color as it is, I just wanted to brighten the room up since we bought the house with orange walls! Lol and love how elegant living rooms can be. We finally finished our basement renovation and that will now be the official family room

My go-to refreshing color is SW Toque White. It has grey undertones but warms up nicely with my oak floors and white tile. Another color in the Italian, stucco-ish yellow tones is SW Jersey Cream. You have to look for it in the orange section of colors, but not orange. You could use either with your gray sofas and then bring in a 3rd accent.

SW Toque White 7003
SW Jersey Cresm 6379
both are much lighter and brighter on wall than the online view.

@schnable1 I was going to ask you about the paint swatches, thank you! And what kinds of colors would you go to accent the lighter walls?

Here are some more photos of our plain living room. We want it to just really appeal to visitors and guests, because in reality we were using it as family room for the kids to play in, and now that the basement is finished, we can put our efforts into totally transforming this space.

Does the TV have to stay? If not, put in some great art. If it stays, lower it so that it isnt looming over the room. Then, a colorful carpet, and a framed artwork over the mantel.

jmm1837 what kind of color for the carpet and flowery or geometric or solid type?

The fireplace photo is very dark -- it's hard to see what is
going on there, it looks dark IRL too. I suggest lightening it up with paint, tiling
the hearth and replacing the glass/brass cover. you need a rug -- definitely
not gray, pick your accent color(s) & find something you love, then stick
with that color & replace the art over the fireplace (i'm not opposed to mirrors over a mantle - but some people are) & get new/more throw
pillows. That chair off in the corner doesn’t look right, but I’m not
sure where it should go.

A colorful area rug, then pull the furniture together for conversation (that comfy chair looks like it's in time out). A nice coffee table, a lamp or two and maybe take the stuff off the mantle and frame the art to make it a bit fuller. You're off to a great start

Sophie may have a "tell it like it is"style, but she is rarely wrong. Please, do not pick a paint color because it is popular. Pick something you love and can live with every day. Go with a white wall color, add color with art, and throw pillows. If you want cozy, add a throw or two, candles, soft curtains that are close in color and tone to the final wall color, an area rug (which you should get first, pick your other colors from that). Art on the walls, side tables in a dark wood.

If you want the fireplace as a focal point, paint it white...new tile would be a plus. Can the brass on the screen be painted with heat resistant grill paint? This product is sold for outdoor grills and works well. If so you would not have to replace it.
The photo is lovely, but too small...either mat and frame or find another wall. A silver framed mirror would be a good replacement. Don’t be tempted to put STUFF on the mantle...less is more.
The tv needs to be lowered. A different console if possible.
I like your grey. Follow advice on art, rug, pillows.

What you need is color...all over the place. Frame the painting which is currently over the fireplace and move it to another location in the room. You need larger piece of art (framed) over the fireplace. Then arrange your furniture to encourage conversation: sofa facing the fireplace, chairs near each end of the sofa, maybe a pair of chairs with a corner table over in one corner, a few wood occasional tables for the ends of the sofa. You need a large rug with color in it: aqua, gray, blue, cream, maybe green. You need draperies in a solid or subtle stripe or trellis design with colors found in the rug. The rug should be large enough that at least the front half of each seating piece near the fireplace will be upon the rug. The corner chairs don't need a rug, but you may want to add one at a later date. You need lighting: a combination of table lamps, floor lamps, and maybe sconces to illuminate the room. After the furniture arrangement pleases you and the rug is brought in, add more art, a vase for flowers, and a few accessories (pillows, a throw, a basket for wood, some books, for example).

I believe that any room can be invited with proper decor. You have a nice room with good height. I would get rid of short curtains, get a coffee table. I brought some warm color, yellow with gray in rug, wall art and accent pillows.

I did this mocking but actually I am not fun of so patterned rug from PB. It looks for me busy.

Love all of these ideas! I was thinking of using slate blue or yellow for the accent pieces.. what size rug would you say I need?

Any ideas for coffee table style - dark wood? glass? round or large square?

What do you think about this rug?

Start by purchasing a major rug: the furniture needs to be anchored (front feet of all seating 6”-8” on it). Take fuller drapes to ceiling height. Clear everything off the mantel. Hang larger art at SEATED eye level.

Lower the TV to about 4” above the console.

The wall colour isn’t calm, it’s DEAD. You need a combination of floor/table lamps to create flattering lighting. You also need convenient places for all sitters to set down a book/snack/drink.

Here is the rule for rug's size .You can measure what size you need.

Update Nov18 - I ended up purchasing this rug from wayfair and wanted to bring out the blues, since it has a very calming effect. Although I really love the rug, I am somehow not sold on either the paint color or the wood/marble of the mantle all in all. Any ideas on how to accentuate the space to make it look cohesive and coordinated? I also am in gazelle intense search for a coffee table, entertainment center, and lamps.

@jbtanyderi what wall color would you go with?

@Sophie Wheeler what wall color would you go with?

felizlady what kind of frame would you buy for the art or would you get rid of it entirely and get another art piece or mirror?