I think you should do barstools around half wall looking into kitchen. Although, you will probably have to change countertop for larger to make for leg room

Sorry, I don't have a floor plan, I don't even know the exact measurements. We haven't closed on our condo yet, all I have are the online photos. I can tell you it's literally one long living/dining space (around 10x18), tiny kitchen and 2 bedrooms (10x12). I'm so excited about decorating but the space is so small and awkward that I'm having trouble figuring out where do put a tiny couch and a tiny dining set...

Something that will make you feel better immediately for little budget / time is to paint all the walls a calm warm neutral. Test sw naturel - a color that works with most color stories but adds instant character since you'll have contrast to your nice white window/door/cabinet/ trim. Then, maybe use a table behind your sofa as a multi-use - desk/ sofa table / two chairs make it an eating table instead of a dining set. Add stools for entertaining/do buffet. Other space saving option is banquet furniture on one wall so table can snug over ballards is pricey but you could remake / reupholster bench w back pad on wall to be creative. Best now to concentrate on building a style with classic neutral pieces, some art you love and make a list of building blocks. Two great chairs that are terrific + good lamps might be a place to start. Go find younghouselove.com and see how thrifty shopping and day can combine to make a wonderful space. Congratulations!

I'd remove the partial crown molding and chair rails to make the space less chopped up. Then add some curtains to all the windows, it will cozy up the room. Since it is small, play it up and go for a cozy, intimate look. And don't be afraid of large pieces, just don't use too many. A great resource is mariakillam.com or the young house love blog. On YHL, look at their first house, it was quite small and charming. Also look at the idea books here on Houzz, they are full of wonderful inspiration pictures. Resist the impulse to use that ledge around the kitchen for knock-knacks, it will just be clutter. In a small space you need to really edit to keep it from being cluttered. I have a very small open living room/dining room space, and try to keep it decluttered as much as possible. The dining "room" backs up to the two small armchairs. I've used similar colors in both spaces, and the tv is now sitting on a blue painted dresser.
I'd also paint the kitchen cabinets a light color, and replace the appliances with either white or stainless to lighten up the space and keep from drawing too much attention to itself.

And for kitchen storage help, I'd get a small buffet and place it under the kitchen ledge facing the dining room. And keep all the dishes and glasses in it to free up space in the actual kitchen for food. And possibly put a flat pot rack on the wall at the end of the kitchen for your bigger cookware.

Forget both lounge and dining look at combining using modular lounge and coffee table with cubes that slip under.

I can't thank you all enough for your great ideas! I'm so excited, I've never heard of MariaKillam.com or Young House Love blog! I will check them both out as soon as I finish this post. I am so excited about moving but having to wait until closing is torture- I have an entirely new plan for the living room/kitchen/dining room based on your posts... I'm much less nervous about decorating now!
Ok, I hope I don't sound crazy but I would love to put one of those portable fire places up against the living room wall, a TV above it and - - here it is:
stone backsplash
Has anyone ever done that? I've seen some DIY video's but I would hate to do all that work and it look like... I did it myself.
Laura- Where did you get that couch and dining set? So cute!

The sofa is from Ballard designs, it is the Lenoir. The slipcover is washable! A must with pets and men. ;-)
The table was a beat up find on Craigslist I painted and recovered the chair seats on. I love it, there is a leaf to make it oval when I need to seat more people, and round is so practical in a small space.